Budget 2023: Textile industry angles for changes in import-export levies

The textiles sector is among those hit hard by the Covid-19 pandemic. And just when the production and exports began recovering, the ongoing Russia-Ukraine war and its spillovers of high inflation and monetary tightening knocked down the sector as developed markets slowed.

Issues and concerns

• Exports have slowed amid downturn in global demand
• Domestic demand also tepid amid a rural sluggishness
• Industry expects cotton shortage

Government support

• Rs 10,683 cr Production Linked Incentive scheme in place
• Man Made Fibre (MMF), garments, technical textiles focus areas
• 7 PM Mega Integrated Textile Region & Apparel Parks planned
• MITRA scheme providing complete value chain support for textile
• $100 billion export target by 2030

Key demands from Budget

• Incentive scheme for textile value chain
• Cotton Price Stabilisation Fund Scheme to push exports
• Replace Technology Upgradation Fund Scheme with PLI type plan
• Issue claims for 40,000 pending cases in ATUFS

Tax expectations

• Remove 11% import duty on cotton, and cotton waste to remain competitive against Bangladesh
• Retain 5% import duty on all types of textile machinery; 5% import duty till March 31, 2023, 7.5% thereafter
• Increase basic customs duty on imports of MMF Yarn to 10% from 5%
• Restore duty-free imports facility against madeups exports
• Cover cotton yarn exports under 3% interest equalization scheme