Union Budget 2012-13 fails to meet SIMA’s demands for MMF


The highly labour intensive textile industry providing direct and indirect employment to over 90 million people is currently undergoing the worst ever crisis due to various external factors and acute power shortage in South India. The industry has pleaded the government to consider various demands to revive the industry from crisis and achieve a sustained global competitiveness.

Mr S Dinakaran, Chairman, South India Mills Association (SIMA) has expressed that the Union Budget 2012-13 though has not made any harm to the textile industry, has failed to consider its genuine demands with respect to manmade fibres (MMF).

He has pointed out that the industry has been demanding to abolish 5% customs duty and 4% special additional duty and also bring the central excise duty on par with cotton textiles for the manmade fibre textiles so that the industry would be able to clothe the people below the poverty line at an affordable cost. He has said that the textile industry is shocked to note that the central excise duty has been increased to 12% which would make the manmade fibre clothing expensive for the rural population.

Mr. Dinakaran has also criticized the increase of service tax from 10% to 12% and bringing most of the services under the service tax net at a wrong time when the industry is suffering. He has strongly felt that since the government has indicated that the GST would be made operational from August 2012, the government could have delayed the rate increase till GST is implemented. He has also stated that the government has failed to reduce the CST from 2% to 1% which should have been done last year budget itself.

SIMA chairman has also pointed out that the industry is shocked to note that no mention has been made about the extension of Technology Upgradation Fund Scheme for the 12th Five Year Plan. He has hoped that the government would soon make an announcement in this aspect.

He has once again reiterated that the extension of TUF scheme is essential to upgrade the technology of weaving and processing sectors and also the technical textiles segment to enhance the value addition and improve the global market share in the textiles and clothing. SIMA Chief has also hoped that the government would make additional provisioning for TUF subsidy for the year 2012-13 as the allocation of Rs.2776 crores might not fully meet the demand for the whole year.

Mr. Dinakaran has pointed out that the Association has been pleading the government to exempt the liquid fuel oil meant for power generation from customs and central excise duties to sustain the survival of the textile mills in Tamilnadu and Andhra Pradesh, which account for around 60% of the spinning capacity of the country and currently facing over 60% power shortage.

Mr. Dinakaran has, however, thanked the government for continuing the optional central excise duty for cotton and synthetic yarns though the rates have been increased from 5% to 6% and 10% to 12% respectively.

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