CITI has welcomed the observations of Shri Pranab Mukherjee immediately after his taking over as Finance Minister, as reported in the print media and in TV interview.  In a statement issued here Shri R.K. Dalmia, Chairman, CITI stated that it is encouraging to note the importance that the Finance Minister has assigned to exports and to labour intensive industries like textiles and clothing.  Shri Dalmia added that the stimulus packages announced by Government so far have not addressed the core issues of the textiles and clothing industry and the statement of the new Finance Minister gives hope to the industry that positive measures can be expected in the ensuing Budget for revitalizing this highly labour intensive industry.

Shri Dalmia added that as rightly observed by the Finance Minister, textiles and clothing industry is one of the hardest hit segments of our economy in the context of global economic slowdown and the decline in the domestic economic growth.  There have been massive unit closures and job losses in this sector and ensuring inclusive growth of the economy will be possible only if proper attention is paid to this sector.

Listing some of the urgent measures required from the Finance Ministry for the sector CITI Chairman highlighted the need for providing sufficient funds for Technology Upgradation Fund Scheme, for refund of Terminal Excise Duty and for payment of Excise Rebate, Draw Back and Service Tax Refund to exporters. He observed that there have been inordinate delay in payment of these government dues and these have been rendering exports uncompetitive, especially when the competing countries like China, Pakistan and Bangladesh have substantially increased their incentives for textiles and clothing exports after global economic slowdown started in August-September 2008. Shri Dalmia pointed out that in India, the rate of these incentives have only come down during this period and state level duties are not refunded to exporters, in spite of several representations to government.  In the absence of a mechanism for coordination among various state governments involved in textile transactions, the only practicable way for refunding state level duties would be for the central government to do so and then recover from statement governments if considered feasible.  Shri Dalmia pointed out that this ad hoc measure would be required only until Goods and Service Tax (GST) gets implemented. He also highlighted the need for increasing the rates of draw back rates on exports of textile products.

Shri R.K.Dalmia drew the attention of Finance Minister to the urgent need for the banks to liberalise their norms for lending to textiles industry and for repayment of term loans. He stated that such liberalization would obviate the real risk of a large number of these loans turning into NPAs, thus helping both the textiles and banking sectors. He pointed out that even in cases referred to CDR Cell, textile units have not been getting viable terms of rescheduling loans with the result that the industry is running into deeper crisis and the capacity of mills to repay loans is diminishing further. Shri Dalmia hoped that the Finance Minister will take necessary corrective steps on an urgent basis to restore the health of this vital industry and help it to continue playing an important role in the economy, including in generation of substantial additional jobs. He added that he would be approaching the Minister with detailed fiscal proposals shortly.