India : Knitted fabric units seek tax breaks in 2006 budget

The Federation of Indian Art Silk Weaving Industry (FIASWI) has urged the Central government to extend the five per cent concessional customs duty to value adding textile machines. 
 
The Federation has made the demand in a pre-budget memorandum to the government. 
 
The warp knitting machines, which are used for manufacturing knitted fabrics, are not manufactured in India, and have to be imported. 
 
The importance of these machines is increasing along with the rise in the demand for knitted fabrics for ready-made garments. 
 
The cost of these machines is already very high, and on account of the high rate of customs duty, it becomes even more difficult for the textile businessmen to import these machines. 
 
"The high cost is also hindering the process of modernisation of the textile industry," FIASWI chairman Arun Jariwala, said. The warp knitting machines will help to add value to the fabrics, which will ultimately be exported, and hence result in foreign exchange earning for the country. 
 
"The government should realise this and extend the five per cent concessional customs duty to the knitting machines, against the ten per cent which is charged presently" he said. 
 
The Federation has further demanded that the machinery used for manufacturing non-woven textiles, which is expected to be one of the biggest avenues of growth for the textile industry, also be allowed to be imported at a concessional duty rate of five per cent. 
 
It has also sought liberalisation for imports of spare parts for textile machinery, in line with the recommendation made by the Special Study Group on Textiles. The Federation has also sought reduction in the excise duty on textile machinery to eight per cent. 
 
At present, the excise duty on most of the textile machineries is 16 per cent. "If one calculates the sales tax and other local levies, the actual tax burden works out to be more than 25 per cent", he said. 
 
These high rate of taxes are slowing down the pace of modernisation of the textile industry. "To expedite the process of modernisation, the excise duty on all textile machineries should be brought down to eight per cent," Jariwala added. 

Business-standard.com