There are a number of suggestions to increase the textile industry’s viability and cost competitiveness while it awaits the Union Budget. First of all, because Indian businesses deal with quality control orders (QCOs) on MMF (man-made fibres) and yarn, raw material prices in India are significantly higher than those in other countries. The unrestricted movement of raw materials is restricted by these non-tariff obstacles. resulting in a shortage of specialized yarns and fibres, which in turn affects local prices. In order to guarantee a more competitive raw material market, the Centre should liberalise import regulations and reduce or do away with customs duties on MMF fibres and necessary chemicals that are vital to the manufacture of raw materials. Since specialised cotton (like organic and contamination-free varieties) is currently imported due to domestic unavailability, import duties to safeguard local farmers are hurting the textile value chains.
The PLI (production-linked incentive) program, which exclusively applies to synthetic fibre, is another oddity. The PLI must be applicable to the whole textile and apparel sector in order to support these businesses and encourage more investment. The government has to bring back the Technology Upgradation Fund Scheme, which provided financial aid for new equipment but was previously halted.
Additionally, a DBT (direct benefit transfer) program ought to take the role of the cotton purchase program under the MSP (minimum support price). Cotton producers will profit from increased liquidity as a result of being able to sell their crop without waiting for formal procurement. A Cotton Price Stabilisation Fund will be established to manage price volatility and guarantee the competitive supply of raw materials. Price volatility might also be reduced by an interest subvention program and an eight-month credit limit term (rather than three months) for cotton buying.
In the end, the industry requests that Section 43B(h) of the IT Act of 1961 be postponed. According to the new Section, payments that an MSME unit does not receive from a company within 45 days will be taxable in the current fiscal year as part of the business income of the firm. Despite being designed to safeguard MSMEs’ interests, it ignores the reality that credit periods vary depending on the stage of production and are usually longer than 45 days. The production schedule and planning for the whole textile value chain have been impacted by the new regulation. To give the industry enough time to adjust to the changes, this bill should be postponed and reintroduced later in stages.