Textiles ministry to push for further duty cut in Budget

Making out a case for further rationalisation of duties, Textiles Minister Kashiram Rana Tuesday said his ministry would seek implementation of the N K Singh committee recommendations for the sector in the ensuing Budget.

"The sector needs incentives of a lower tax burden in order to prepare for 2005 - the post quota regime. We are convinced that implementation of the recommendations of the Singh committee which has favoured Cenvat of between eight to 12 per cent is crucial for the sector," Rana said.

Terming recommendations of the Kelkar committee which has mooted a duty structure of 14-16 per cent as "too high a burden for industry to bear", Rana said he would push for implementation of the Singh committee with the finance ministry.

Rana pointed out that the duty rationalisation exercise in the previous budget had yielded positive results not only in terms of improved production but enhanced exports.

"Since the last budget, exports have surged and we are expecting to achieve the $15 billion export target set for the current fiscal," he said.

Favouring continuation of existing exemptions in some sectors such as powerlooms, he said these incentives should be continued even if government had to forgo some revenue since competing countries like China were providing subsidies to their textiles industry.

The high powered N K Singh committee on textiles has favoured excise exemption to the "genuinely disadvataged" sectors while suggesting an eight per cent merit rate of Cenvat starting at the yarn stage for three years.

The merit rate of eight per cent is in sharp contrast to the Kelkar committee report which has recommended a uniform duty of 16 per cent to be reduced to 14 per cent by 2004-05.

To rationalise duty structure in textiles sector, the report has also recommended that Cenvat on polyster cotton and viscose-cotton blended yarns should be brought at par.

In this context, it has recommended that the Cenvat on polyster items should be brought down from 32 per cent to 16 per cent in one or two phases.