Budget 2012: Little cheer for textile industry

This Budget offers little to lift the low spirits of textile industry. The 10% excise duty levied on branded garments has been taken under the overall excise duty ambit, which has been raised to 12% from 10%.

In terms of impact, there would be marginal benefit to textile companies in the higher end of the value chain.

Earlier, excise duty was levied on 45% value of a garment and the remaining 55% was considered non-manufacturing expenses and, hence, exempted from duty. For instance, a garment with a maximum retail price (MRP) of Rs100 would have earlier attracted an excise duty of Rs 4.5. But now, a garment would attract excise duty on 30% of its MRP and the rest 70% would be treated as non-manufacturing cost.

This would translate into an excise duty of Rs 3.60 on an MRP of Rs100. Companies such as Mandhana Industries, Arvind Ltd and Alok Industries would benefit marginally.

The Budget also proposed customs duty exemption of shuttleless looms from 5% to zero, which would benefit spinning mill companies such as Nahar Spinning Mills, Vardhman Textiles, Sangam India and Suryajyoti Mills.