Indian Union Budget 2022 (Views by Mr. Rajiv Ranjan, President – TAI Mumbai Unit)
The budget allocation announced on Feb 1, 2022, for the Textile Sector for the year 2022-23 is a mixed bag. While the increase in the budget allocation is marginal, the emphasis in the budget on boosting infrastructure and ease of doing business should go a long way in supporting the sector to grow substantially, especially in exports.
The allocation for the Sector stands at about Rs.12,382.14 crore which is about 8.1% higher than the revised budget allocation of 2021- 22 ,which stood at about Rs.11,449.32 crores. The allocation during 2021-22 was initially Rs.3,631.64 crores. However, it was later revised to Rs.11,449.32 crores mainly due to an increased allocation for ‘Procurement of Cotton by Cotton Corporation of India (CCI) Ltd. under Price Support Scheme’, from Rs.136 crore to Rs. 8,439.88 crores.
For the year 2022-23, the Government has allocated about Rs.9,243.09 for procurement of cotton which is about 9.5% higher than the revised allocation of last year. Thus the net allocation for the Textile Sector, other than cotton procurement, is higher by a marginal 4.31% at Rs. 3139.05 cr for the year 2022-23 as compared to revised allocation of Rs.3009.44 for 2021-22.
According to the Union Budget presented on Feb 1, 2022, of the total allocation of ₹12,382 crore for the textile sector for next financial year, ₹133.83 crore is for Textile Cluster Development Scheme, ₹100 crore for National Technical Textiles Mission, and ₹15 crore each for PM Mega Integrated Textile Region and Apparel parks scheme and the Production Linked Incentive Scheme. With the announcement of an allocation of about Rs.133.83 crores for ‘Textile Cluster Development Scheme’, the total budget allocation for Research and Capacity Building for Textiles has increased by 73.4% to reach about Rs.478.83 crore in 2022-23 as compared to the revised budget allocation of Rs.276.10 crore in 2021-22. The recently announced Production Linked Incentive (PLI) Scheme and PM Mega Integrated Textile Region and Apparel (PM MITRA) Scheme also saw an allocation of Rs 15 crore each for 2022-23. The Government has also allocated Rs.105 crore for the year 2022-23 towards ‘Raw Material Supply Scheme’ which has already been approved for the implementation during the period 2021-22 to 2025-26.
While this is not a part of the allocation for the Textile Sector, the government has also announced the PM GatiShakti National Master Plan which encompasses the seven engines for economic transformation, seamless multimodal connectivity and logistics efficiency. The seven engines that drive PM GatiShakti are Roads, Railways, Airports, Ports, Mass Transport, Waterways and Logistics Infrastructure. Steps have been taken by the Government for the extension of Emergency Credit Line Guarantee Scheme (ECLGS) up to March 2023. The guarantee cover under ECLGS will be expanded by Rs. 50,000 Crore to a total cover of Rs. 5 Lakh Crore. Similarly, Rs. 2 lakh crore additional credit for Micro and Small Enterprises will be facilitated under the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE). The Government is also rolling out Raising and Accelerating MSME performance (RAMP) programme with outlay of Rs 6000 Crore. All these steps will strengthen the MSME Segment which holds major share in the Textile & Clothing Sector.
Decisions like ‘Amritkaal’ the next phase of Ease of Doing Business (EODB) 2.0 and Ease of Living will be launched by the Government shortly. Actions of the government like the additional allocation of Rs.19,500 crores for Production Linked Incentive for manufacturing high efficiency solar modules to meet the goal of 280 GW of installed solar power by 2030 will be fruitful for the textile industry in the coming years. The decision of the Government for replacing Special Economic Zones Act with new legislation will enable the States to become partner in the ‘Development of Enterprise and Service Hubs’. It will cover the existing industrial enclaves and enhance the competitiveness of our textile exports. The government has also announced various moves to incentivise exports. Gradually phasing out of the concessional rates in capital goods and project imports and applying a moderate tariff of 7.5 percent will be conducive to the growth of domestic sector and ‘Make in India’.
Certain duty exemptions for advanced machineries that are not manufactured within the country shall continue and help the textile sector as Indian textile sector depends on state-of-the-art textile machineries. Exemptions on items such as embellishment, trimming, fasteners, buttons, zipper, lining material, specified leather, furniture fittings and packaging boxes will help the textile sector.
The current Union Budget doesn’t make any direct announcement for the textile and clothing sector. However, if we see the entire budget speech in totality, it talks more about the inclusive development of the new India. The Government has already gone beyond a level and has done so much for the textile sector. It is now for India Inc. to look for developing at other important aspects of the businesses like infrastructure development, liquidity, labour and power issues, availability of raw materials, ease of doing business, FTAs, technology transfer, etc to enhance the cost competitiveness of Indian products in the global market.
(Source: Various Newspaper & CITI Reports)