 Budget 2004-05: Textile
After Multi Fiber Arrangement (MFA) is phased out, the textile industry of developing economies like India will have a reason to be optimistic about the long-term growth opportunity. The textile manufacturers will have a chance to increase the share of exports to the European Union (EU) and US markets.
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Cenvat duty on handloom and powerlooms has been withdrawn |
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Instead a new tax regime for the textile sector has been introduced
- Mandatory Cenvat chain stands abolished.
- No mandatory excise duty on pure cotton, wool and silk, be it fibre, yarn, fabric or garment.
- Blended textiles and pure non-cotton items like polyester, viscose, acrylic and nylon will have a different tax regime.
- Mandatory excise duty on man-made staple fiber at 16% imposed.
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2% education cess on all taxes. |
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The removal of duty will make the handloom and powerloom products competitive post 2005 when international markets open up for Indian players. However, to some extent, this will have a negative impact on the established branded garment players. |
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With the removal of excise duty on pure cotton, wool and silk products, the Indian companies will be much more competitive to face international low cost producers from China, Sri Lanka, Pakistan etc. |
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MFA is an agreement through which a particular country is restricted to export its textile products beyond a certain level to European and US markets. After Multi Fiber Arrangement (MFA) is phased out, the India textile industry will get access to European and US markets. The textile majors are planning to add capacities in order to capitalize on the situation. The government has taken some measures to make the textile players more competitive by providing excise cuts for some of the categories. Our long term outlook on the sector remains positive. |
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The CENVAT chain should be further strengthened and proper compliance of excise duty regulations should be enforced on all players in the industry. Excise cover should not be expanded, as it would help only the large operators in the textile market. |
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In order to attract more investments, all textile segments should have a uniform basic excise duty of 8%. For texturised yarn segment, the excise duty should be gradually reduced from current level of 24% to 8%. |
| Budget 2001-02 |
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Budget 2002-03 |
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Budget 2003-04 |
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| The allocation for textiles enhanced by more than 50 per cent from Rs 4.5 bn in 2000-01 to Rs 6.5 bn in 2001-02.
New schemes of setting up integrated apparel parks.
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The excise duty rates on yarns fixed at 8%, which was not there earlier. Excise duty rates on ready to wear garments at 12%.
Excise duty exemption on handloom fabrics to continue and automatic shuttleless looms provided exemption from excise duty.
The customs duty on automatic shuttle less machinery reduced from 25% to 10%.
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Reduction of excise duty on polyester filament yarn from 32% to 24%.
Excise duty on all knitted cotton fabrics and garments reduced from 12% to 8%.
Basic customs duty on paraxylene reduced from 10% to 5%.
Excise duty on garments reduced from 12% to 10%.
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| Key Positives |
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| Post 2005, Multi Fiber Arrangement (MFA) will be phased out. This will enable Indian companies to export their products in any quantity to any country as against a specific quota provided for export. |
| Due to cheaper labor available in India as compared to European countries, the big brands have started outsourcing garments from Indian companies. Thus the growth potential expands post 2005. |
| In order to restructure the sector, the government set up a textile reconstruction fund that will help in reducing the effective interest burden on viable textile companies. This fund targets reduction in interest rate for all borrowers in range of 8%-9%. |
| The government has set an ambitious textile export target of US$ 50 bn by 2010 as compared to US$ 11 bn currently. Considering the huge potential in the European and the US markets, it seems possible. |
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| Key Negatives |
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| Impractical labour laws also restrict large players to lay off redundant workers to improve competitiveness. Though promise of labour reforms have been made n the past, there has been a lag in terms of implementation. |
| One of the biggest drawbacks of the India textile sector is that it is highly fragmented at lower levels. Access to finance and technology has been hard to come by, thus affecting growth prospects of smaller manufacturers. |
| Since raw material cost as percentage of expenses is significant, the textile majors have suffered. |
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| Sector Performance |
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| COMPANY |
PRICE (Rs) |
|
| A.V.COTTEX |
30.8
(5.0%) |
|
| AANANDA LAKSHMI |
16.9
(-1.9%) |
|
| AARVEE DENIMS & EXPORT |
26.0
(1.8%) |
|
| AB COTSPIN INDIA LTD. |
239.5
(-5.0%) |
|
| ACKNIT INDUSTRIES |
262.8
(4.8%) |
|
| ADDI IND. |
53.4
(2.9%) |
|
| ADHINATH TEX. |
26.9
(-1.8%) |
|
| ADITYA SPIN. |
20.0
(0.9%) |
|
| ADVANCE LIFESTYLES |
45.8
(0.8%) |
|
| AKM LACE AND EMBROTEX |
111.0
(-0.8%) |
|
| AKSHAR SPINTEX |
2.5
(0.8%) |
|
| ALOK INDUSTRIES |
26.7
(-0.5%) |
|
| AMARJOTHI SPINNING |
180.1
(-1.5%) |
|
| AMBASSADOR INTRA HOLDINGS |
43.6
(-0.1%) |
|
| AMBIKA COTTON |
1,534.0
(-0.2%) |
|
| AMRAPALI INDUSTRIES |
15.2
(4.4%) |
|
| AMRAWORLD AGRICO |
1.0
(1.0%) |
|
| ANGEL FIBERS |
21.7
(0.0%) |
|
| ANJANI SYNTHETICS |
44.9
(3.5%) |
|
| APM INDUSTRIES |
65.9
(2.6%) |
|
| ARVIND |
378.4
(-0.3%) |
|
| ASHIMA. |
24.4
(2.6%) |
|
| ASHNOOR TEXTILE |
51.2
(-0.5%) |
|
| AUNDE FAZE THREE |
91.9
(-0.2%) |
|
| AVIVA INDUSTRIES |
24.4
(-0.4%) |
|
| AXITA COTTON |
22.1
(-0.3%) |
|
| AYM SYNTEX |
91.0
(-0.8%) |
|
| BANG OVERSEAS |
49.1
(-4.0%) |
|
| BANNARI AMMAN SPIN |
50.5
(0.4%) |
|
| BANSWARA SYNTEX |
152.0
(1.3%) |
|
| BARODA RAYON |
181.8
(0.0%) |
|
| BELLA CASA FASHION |
304.1
(-2.2%) |
|
| BENGAL TEA |
143.0
(4.4%) |
|
| BETEX INDIA |
234.6
(2.9%) |
|
| BHANDARI HOSIERY |
7.9
(0.6%) |
|
| BHILWARA TECHNICAL TEX. |
37.0
(2.5%) |
|
| BILLWIN INDUSTRIES |
45.0
(-1.4%) |
|
| BINAYAK TEX PROC. |
1,040.0
(0.0%) |
|
| BINDAL EXPORTS |
21.6
(3.0%) |
|
| BINNY |
166.7
(-2.5%) |
|
| BINNY MILLS |
208.1
(-5.0%) |
|
| BIZOTIC COMMERCIAL |
52.9
(3.4%) |
|
| BL.CHIP TEX |
169.1
(-1.7%) |
|
| BLACK ROSE IND |
127.3
(-0.0%) |
|
| BOMBAY DYEING |
186.4
(3.5%) |
|
| BSL. |
177.5
(-1.1%) |
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| CENTURY ENKA |
606.4
(0.4%) |
|
| CHANDNI MACHINES |
55.3
(4.9%) |
|
| CHEVIOT CO. |
1,319.0
(0.1%) |
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| CIL NOVA PETRO |
38.2
(3.8%) |
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| CITYMAN |
25.2
(0.0%) |
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| CPS SHAPERS LTD. |
368.0
(5.1%) |
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| DAMODAR INDUSTRIES |
49.5
(-2.5%) |
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| DCM |
74.1
(0.1%) |
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| DCM NOUVELLE |
203.4
(0.0%) |
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| DHAN ROTO SP |
182.6
(4.5%) |
|
| DHANLAXMI FABRICS |
70.0
(-2.4%) |
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| DIGJAM |
83.5
(-3.4%) |
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| DOLLAR INDUSTRIES |
626.8
(1.6%) |
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| DONEAR IND. |
101.7
(-1.2%) |
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| E LAND APPAREL |
8.1
(2.5%) |
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| EASTERN SILK IND |
2.1
(-4.9%) |
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| EUROTEX IND |
12.5
(-2.0%) |
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| EVERLON SYN. |
93.0
(-0.0%) |
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| FAZE THREE |
417.8
(-3.0%) |
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| FIBERWEB (INDIA) |
36.7
(1.6%) |
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| FILATEX INDIA |
56.7
(1.9%) |
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| FLORA TEXTILES |
11.2
(5.0%) |
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| GAEKWAR MILLS |
12.5
(0.0%) |
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| GANESHA ECOSPHERE |
1,135.0
(2.6%) |
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| GANGOTRI TEX |
1.2
(4.6%) |
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| GARMENT MANTRA LIFESTYLE |
5.9
(4.2%) |
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| GARWARE TECHNICAL |
3,227.8
(-1.0%) |
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| GEM SPINNERS |
3.3
(0.9%) |
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| GHCL TEXTILES |
84.3
(-0.9%) |
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| GINNI FILAM. |
36.7
(0.7%) |
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| GIVO. |
2.6
(0.0%) |
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| GLOBE TEXTILES (INDIA) |
3.3
(0.0%) |
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| GLOBUS CONST. |
17.3
(0.2%) |
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| GLOSTER |
844.0
(-1.9%) |
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| GO FASHION (INDIA) |
1,027.2
(1.3%) |
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| GOKAK TEXTILES |
200.8
(3.6%) |
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| GOLDEN CARPE |
12.4
(0.0%) |
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| GRASIM |
2,433.1
(0.4%) |
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| GTN INDUSTRIES |
32.2
(0.0%) |
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| GTN TEXTILES LIMITED |
11.9
(-3.3%) |
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| GUJARAT COTEX |
4.7
(4.9%) |
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| HAR.FIBRES |
15.1
(0.0%) |
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| HARIA APPARELS |
5.9
(5.0%) |
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| HARISH TEXTILE ENGINEERS |
52.7
(4.9%) |
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| HIGH STREET |
59.2
(5.0%) |
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| HIMATSINGKA SEIDE |
135.5
(0.9%) |
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| HISAR SPIN. |
48.0
(-1.0%) |
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| INDO COUNT |
389.7
(-0.5%) |
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| INDO RAMA SYN |
43.7
(-1.8%) |
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| INTEGRA ESSENTIA |
3.6
(-1.9%) |
|
| IRIS CLOTHINGS |
83.0
(0.7%) |
|
| JAGJANANI TEXTILES |
10.3
(4.9%) |
|
| JAKHARIA FABRIC |
34.0
(0.0%) |
|
| JAMSHRI RANJ |
11,490.0
(1.3%) |
|
| JATTA POLY |
21.0
(-2.3%) |
|
| JAYKAY ENTERPRISES |
132.0
(1.0%) |
|
| JINDAL COTEX |
2.6
(1.6%) |
|
| JINDAL POLYFILMS |
530.9
(1.8%) |
|
| JIWANRAM SHEODUTTRAI INDUSTRIES LTD. |
15.5
(0.0%) |
|
| KAKATIYA TEXT. |
28.1
(-3.9%) |
|
| KALLAM SPG. |
8.4
(1.2%) |
|
| KAMA HOLDINGS |
2,531.9
(0.9%) |
|
| KAMADGIRI SY |
75.3
(-8.2%) |
|
| KANDAGIRI SPINNING |
28.7
(5.0%) |
|
| KAPIL COTEX |
159.4
(-5.0%) |
|
| KARNIKA INDUSTRIES LTD. |
310.0
(3.4%) |
|
| KEWAL KIRAN CLOTHING |
666.5
(0.9%) |
|
| KHOOBSURAT |
1.2
(0.0%) |
|
| KIRAN SYNTEX |
8.6
(-4.6%) |
|
| KITEX GARMENTS |
213.2
(-0.1%) |
|
| KPR MILL |
834.9
(0.6%) |
|
| LA-MERE APP. |
39.3
(-2.5%) |
|
| LAKHOTIA POLY |
34.0
(0.0%) |
|
| LAKSHMI MILLS |
4,941.6
(0.8%) |
|
| LAMBODHARA TEXTILES |
148.8
(-0.1%) |
|
| LAXMI COTSPIN |
34.0
(5.0%) |
|
| LE MERITE EXPORTS |
81.9
(0.3%) |
|
| LORENZINI APPARELS |
25.4
(0.6%) |
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| LOVABLE LINGERIE |
134.1
(1.9%) |
|
| LOYAL TEXTILE MILLS |
600.0
(2.0%) |
|
| LUDLOW JUTE |
85.4
(2.1%) |
|
| LUX INDUSTRIES |
1,606.2
(2.0%) |
|
| LWS KNITWEAR |
28.0
(-0.1%) |
|
| M. K. EXIM |
82.2
(0.9%) |
|
| MAHALAXMI RUBTECH |
210.1
(-0.0%) |
|
| MANDHANA INDUSTRIES |
9.8
(-4.8%) |
|
| MANOMAY TEX INDIA |
188.7
(-2.1%) |
|
| MARAL OVERSEAS |
74.0
(0.2%) |
|
| MARIS SPIN. |
40.3
(3.8%) |
|
| MEERA INDUSTRIES |
42.7
(-1.4%) |
|
| MID INDIA INDUS. |
13.7
(5.0%) |
|
| MISH DESIGNS |
138.0
(0.7%) |
|
| MOHIT INDUST. |
21.8
(1.8%) |
|
| MONTE CARLO |
688.2
(-0.4%) |
|
| MORARJEE TEXTILES |
18.8
(-5.0%) |
|
| NAGREEKA EXPORTS |
30.9
(0.2%) |
|
| NAHAR INDUSTRIES |
123.2
(-0.0%) |
|
| NAHAR POLY FILMS |
188.2
(-2.3%) |
|
| NAHAR SPINNING M |
268.9
(-0.7%) |
|
| NANDAN DENIM |
39.0
(-0.9%) |
|
| NANDANI CREATION |
56.3
(4.9%) |
|
| NEO INFRACON |
15.8
(4.9%) |
|
| NEW LIGHT APPARELS |
21.1
(0.5%) |
|
| NIBE LIMITED |
1,499.1
(0.0%) |
|
| NITIN SPINNER |
348.2
(1.5%) |
|
| NUTECH GLOBAL |
22.8
(5.0%) |
|
| NUTRICIRCLE |
237.6
(0.0%) |
|
| OMKAR OVERSEAS |
4.5
(4.9%) |
|
| ORBIT EXPORTS |
165.9
(2.1%) |
|
| OSIAJEE TEXFAB |
43.2
(0.4%) |
|
| OSWAL YARNS |
23.0
(-2.0%) |
|
| OVERSEAS SYNTHETICS |
96.0
(1.9%) |
|
| PAGE INDUSTRIES |
35,795.4
(0.7%) |
|
| PARAS PETROFILS |
3.3
(1.9%) |
|
| PASARI SPIN |
7.8
(-4.9%) |
|
| PASUPATI ACRYLON |
38.7
(1.2%) |
|
| PASUPATI SPG |
36.0
(5.7%) |
|
| PATSPIN INDIA |
14.0
(3.9%) |
|
| PBM POLYTEX |
92.0
(3.9%) |
|
| PEARL GLOBAL |
623.2
(-0.0%) |
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| PEETI SECURITIES |
23.3
(10.0%) |
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| PIONEER EMBROID. |
43.0
(0.2%) |
|
| PODDAR DEVELOPERS |
109.5
(3.6%) |
|
| PRAKASH WOOL |
37.9
(4.9%) |
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| PRECOT MERIDIAN |
377.0
(0.1%) |
|
| PREMCO GLOB. |
426.6
(0.0%) |
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| PREMIER SYNTHETICS |
15.5
(2.0%) |
|
| PRIME URBAN DEV. |
9.5
(0.2%) |
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| RAGHUVIR SYNTHETICS |
115.7
(2.3%) |
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| RAJ RAYON IND. |
22.0
(-1.8%) |
|
| RAJASTHAN PETRO |
3.3
(0.3%) |
|
| RAJKAMAL SYNT. |
31.5
(0.1%) |
|
| RAMGOPAL POL |
6.0
(3.7%) |
|
| RANGOLI TRADECOMM |
5.6
(4.9%) |
|
| RAYMOND |
2,233.8
(-1.0%) |
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| REDTAPE |
729.0
(-0.9%) |
|
| RELIANCE CHEMOTEX |
200.0
(-0.4%) |
|
| RIBA TEXTILES |
77.0
(0.2%) |
|
| RITESH INTER |
27.5
(1.2%) |
|
| RSC INTERNATIONAL |
8.1
(4.0%) |
|
| RSWM |
181.9
(-0.6%) |
|
| RUBY MILLS |
214.3
(1.1%) |
|
| RUDRA ECOVATION |
52.1
(5.0%) |
|
| S V GLOBAL |
98.9
(3.5%) |
|
| S&T CORPORATION |
26.4
(-0.2%) |
|
| S.P. APPARELS |
590.5
(0.5%) |
|
| SAHAJ FASHIONS LTD. |
21.1
(0.0%) |
|
| SALONA COTSPIN |
306.0
(3.8%) |
|
| SAMBANDAM SPIN |
157.0
(0.8%) |
|
| SAMTEX FASHIONS |
2.4
(3.9%) |
|
| SANRHEA TECHNICAL |
150.0
(3.5%) |
|
| SARLA PERFORMANCE |
93.8
(1.2%) |
|
| SAYAJI INDUSTRIES |
173.3
(-0.5%) |
|
| SEL MANUFAC |
69.5
(0.4%) |
|
| SHAHLON SILK IND |
23.8
(-1.9%) |
|
| SHANTI SPINTEX LTD. |
68.5
(5.0%) |
|
| SHEKHAWATI POLY |
3.3
(1.9%) |
|
| SHESHADRI INDUSTRIES |
13.8
(0.4%) |
|
| SHINE FASHIONS (INDIA) |
180.2
(5.0%) |
|
| SHIVA MILLS |
97.5
(-1.4%) |
|
| SHIVA SUITINGS |
25.8
(-5.0%) |
|
| SHIVA TEXYARN |
153.4
(-0.6%) |
|
| SHREE BHAVYA FABRICS |
22.3
(-1.3%) |
|
| SHREE KARNI FABCOM LTD. |
421.7
(-1.2%) |
|
| SHREE MANUFACT. |
16.6
(4.5%) |
|
| SHREE RAJASTHAN SYN. |
7.4
(5.0%) |
|
| SHRI DINESH |
488.5
(-0.3%) |
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| SHUBHAM POLYSPIN |
20.1
(1.7%) |
|
| SIGNORIA CREATION LTD. |
146.3
(-2.5%) |
|
| SIL INVESTMENTS |
500.5
(0.0%) |
|
| SIMPLEX MILLS |
4,137.0
(-5.0%) |
|
| SIYARAM SILK |
459.0
(0.7%) |
|
| SKS TEXTILES |
13.1
(0.0%) |
|
| SOMA TEXTILES |
34.9
(3.8%) |
|
| SOURCE INDUST. |
2.9
(-3.3%) |
|
| SPECTRUM ELEC |
1,546.6
(3.3%) |
|
| SPL INDUSTRIES. |
59.5
(-1.3%) |
|
| SPORTKING INDIA |
796.8
(-0.0%) |
|
| SREE JAYALAK. |
6.8
(4.9%) |
|
| SRF |
2,278.6
(-0.1%) |
|
| SRI LAK.SAR. |
49.8
(-2.0%) |
|
| SRI NACHAMAI |
40.0
(-2.7%) |
|
| SRI NANDAA SPINNERS LTD. |
4.9
(-9.4%) |
|
| SUBHASH SILK |
24.2
(0.0%) |
|
| SUMEET INDUSTRIES |
2.6
(0.8%) |
|
| SUNCITY SYNT |
20.9
(5.0%) |
|
| SUNIL INDUS. |
85.0
(4.9%) |
|
| SUPER FINE KNITTERS |
12.0
(-5.0%) |
|
| SUPER SALES |
2,034.8
(1.9%) |
|
| SUPER SPINNING |
7.5
(4.9%) |
|
| SUPERTEX IND |
11.0
(4.8%) |
|
| SURAT TEXT. |
9.5
(1.0%) |
|
| SURBHI IND. |
4.4
(5.0%) |
|
| SURYAAMBA SPINNING |
160.0
(-1.8%) |
|
| SURYALAKSHMI COTT |
72.7
(-0.0%) |
|
| SURYALATA SP |
403.0
(2.2%) |
|
| SUTLEJ TEXTILES |
57.0
(2.4%) |
|
| SUUMAYA INDUSTRIES |
8.2
(0.6%) |
|
| SUZLON FIBRE |
8.7
(5.0%) |
|
| SWADESHI POLYTEX |
337.6
(-5.0%) |
|
| SWAN ENERGY |
600.0
(0.0%) |
|
| SWARAJ SUITING |
237.0
(4.0%) |
|
| SWASTI VINAYAKA SYN |
7.3
(-1.8%) |
|
| SYBLY INDUSTRIES |
6.0
(4.4%) |
|
| TATIA GLOBAL VEN. |
4.0
(-1.7%) |
|
| TCNS CLOTHING CO. |
459.9
(-0.4%) |
|
| TEJASSVI AAHARAM |
65.7
(4.2%) |
|
| TINE AGRO |
35.3
(-2.0%) |
|
| TITAANIUM TEN ENTERPRISES |
29.9
(-5.0%) |
|
| TITAN INTECH |
69.6
(4.9%) |
|
| TRIDENT |
40.5
(0.9%) |
|
| TRIDENT TEXOFAB |
47.0
(-2.1%) |
|
| TRITON CORP |
0.5
(4.2%) |
|
| TT |
110.7
(0.5%) |
|
| TUNI TEXTILE |
1.8
(4.0%) |
|
| UNISOCKS (I) |
12.0
(-0.6%) |
|
| UNITED LEASING |
30.6
(4.2%) |
|
| UNITED TEXT. |
21.4
(4.3%) |
|
| UNIWORTH |
0.9
(0.0%) |
|
| VALSON INDUS |
27.8
(1.0%) |
|
| VANDANA KNITWEAR |
4.0
(1.3%) |
|
| VARDHMAN TEXTILES |
462.2
(-0.1%) |
|
| VEEJAY LAKSH. |
60.2
(5.0%) |
|
| VEEKAYEM FASHION AND APPARELS LTD. |
257.6
(5.0%) |
|
| VENTURA TEXTILES |
10.3
(-1.9%) |
|
| VIJAY TEXTILE |
16.7
(1.8%) |
|
| VINNY OVERSEAS |
4.5
(2.8%) |
|
| VIP CLOTHING |
37.7
(0.4%) |
|
| VISHAL COTSPIN |
54.2
(-4.9%) |
|
| VIVAA TRADECOM LTD. |
33.5
(-4.2%) |
|
| VOITH PAPER |
2,046.6
(2.9%) |
|
| VTM LIMITED |
68.9
(2.3%) |
|
| WEIZMANN. |
123.1
(-0.4%) |
|
| WELSPUN LIVING |
145.4
(0.8%) |
|
| WINSOME TEXTILE |
75.7
(5.0%) |
|
| WINSOME YARNS |
3.6
(-1.4%) |
|
| WIRES & FABRIKS |
157.1
(-3.0%) |
|
| YORK EXPORTS |
40.2
(-5.0%) |
|
| ZENITH EXPORTS |
177.1
(2.9%) |
|
|
|