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Removal of additional excise — Textiles sector could attract Rs 60,000-cr investments: Vaghela

Our Bureau

Mumbai , July 15

THE Budget proposals that do away with additional excise duty on textiles, besides giving textile units the option to choose the excise exemption route, could see investments of around Rs 60,000 crore flow into the sector over the next five years, according to the Minister for Textiles, Mr Shankersinh Vaghela.

The abolition of additional excise duty on textiles and textile articles, as well as the reduction of basic customs duty on various textile machinery and spare parts to 5 per cent, could also see the addition of one million new jobs, he said.

Speaking at the two-day Textile and Apparels Congress here on Thursday, Mr Vaghela said the decentralised sector, namely, the powerlooms, handlooms, and small garmenting units, would be the main beneficiaries of the proposal to give the textile sector the option to choose the excise exemption route, he said. The decision would spare them the trouble of maintaining excise records and complying with excise procedures, besides putting a check on excise evasion and the `Inspector Raj.'

The Government, he said, was committed to launching modernisation programmes for the textile industry to help it face up to the challenges thrown up by the phasing out of quotas at the end of December 2004.

The developing countries, including India, he said, were looking forward to the end of the quota regime in the hope that free trade would throw up opportunities for increased growth and market access.

However, he cautioned that the sector could see the use of increased trade defence measures including recourse to trade remedies such as anti-dumping/anti-subsidy action, trade protectionist tactics like regional trade agreements (RTAs) and discrimination between developing countries and link up with non-trade issues like social clauses and environmental issues in the name of sustainable development.

In the free trade environment, success would hinge purely on factors such as quality, prices, delivery schedules and marketing skills.

In order to increase its share in the global textiles trade, he said, India would need to move up the value chain by capitalising on strong raw material base and by making the most of the growing synergy between textiles and the clothing sector. The latter, he said, would enable the country expand its export base of high-value products such as garments and made-ups.

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