TUF SUBSIDY

NEW DELHI: The Government today enhanced subsidy allocation for modernisation of the textiles industry to Rs 15,404 crore from earlier sanction of Rs 8,000 crore for the current Plan ending 2012.

The decision to increase the outlay and re-structure the Technology Upgradation Fund (TUF) was taken by the Cabinet Committee on Economic Affairs here.

Of the additional Rs 7,404 crore, Rs 1972 crore would be available for fresh sanctions while the remaining Rs 5,432 crore is meant for fulfilling the committed liabilities under the TUF scheme.

Under the re-structured scheme, 5 per cent interest subsidy and 10 per cent capital sops would be provided on brand new looms.

"The CCEA approval will enable immediate lifting of the pause button imposed by the Ministry of Textiles since June 29, 2010," an official said after the meeting.

The interest and capital subsidy would encourage investment in the industry worth Rs 47,000 crore, he said.

According to the mid-term appraisal of the TUF scheme conducted by rating agency CRISIL , because of its positive impact the programme should be continued in the XII (2012-17) Plan period as well.

However, it recommended that it should be re-structured in a manner that the benefits also go to processing units instead of the spinning segment which was the major beneficiary now.

The Indian textiles industry which contributes 14 per cent of the total manufacturing, has global brands like Nike , Reebok , Pepe Jeans, Armani and Versace to sourcing their merchandise from the country.

In the overall textile sector, India's share in the world market is 16.8 per cent and the country ranks only after China among the developing nations, a report by UN Industrial Development Organisation ( UNIDO )) said.

 

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High prices may cut spinning mills' margins by 2.5%

	BS Reporter / Mumbai March 24, 2011, 0:15 IST Rising cotton prices are expected to reduce operating margins of spinning companies by 2.5 per cent in 2010-11, Crisil research said in a report. Cotton prices have surged almost 80 per cent in the last one year and by 65 per cent between October and February as exporters had a deadline till February.  Click here to visit SME Buzz Cotton procurement cost for spinning mills is also expected to move up by 30-35 per cent. Textile manufacturers, however, say their margins are protected as they are in a position to pass on the increasing cost. “We have procured cotton at low prices and charge our customers according to the current raw material rate. This will, thus, not increase our procurement costs,” said CFO of a leading textile company. Cotton prices on domestic and international markets are expected to ease taking cues from a fall in global prices of the commodity. Cotton yarn prices may not move up drastically, the report said. “So far, strong demand growth has enabled spinning companies to pass on the rise in cotton prices to buyers. Cash accruals for players have, therefore, jumped by more than 65 per cent year-on-year in 2010-11. Spinners, however, will not be able to increase prices significantly in the coming months, as downstream fabric and garment companies would find it difficult to get similar increases from their consumers. This would affect profitability,” said Sridhar C, head, Crisil Reasearch.

 

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FW: Domestic will revive back because - Reduction in assesment value for Branded garment.

News Flash

COAL MINISTER: COAL MINISTER SAYS COAL INDIA FY'12 PRICE HIKES TO DEPEND ON WAGES

FM rolls back 5% service tax on healthcare

Press Trust of India, March 22, 2011 (New Delhi)

Bowing to demand from all quarters, finance minister Pranab Mukherjee on Tuesday announced withdrawal of the proposed 5 per cent service tax on airconditioned hospitals with more than 25 beds and on diagonistic services.

He also provided some relief to readymade garment manufacturers by raising the abatement available for levy of taxes on retail price of some branded garments and textile made-ups.

"The purpose of the new levy (healthcare) was not merely to mobilise revenue, but to pave the way for introduction of the GST. However, I have decided to exempt the new levy in its entirety both in respect of services provided by hospitals as well as by way of diagnostic tests until GST comes into force", Mukherjee said while moving the Finance Bill in the Lok Sabha for consideration and passage.

The announcement was greeted with loud thumping of desks by members as the minister hoped that it will no more be called "misery tax".

Both these proposals, mooted by the minister as part of Budget for 2011-12 on February 28, had evoked sharp reaction from the interest groups.

During the general discussion on the Budget last week, almost all political parties wanted the finance minister to withdraw the healthcare service tax proposal, which was dubbed as "misery tax".

The garment traders had criticised the proposed 10 per cent excise duty on readymade garments saying it would hurt the small business.

"To address this concern, I propose to enhance the abatement of 40 per cent to 55 per cent on the retail sale price. With this relief, a unit will continue to be eligible for SSI exemption in 2011-12 even if it had a turnover based on retail sale price of Rs. 8.9 crore in the current year", the minister said.

Under the revised norms, 10 per cent excise would be levied on 45 per cent of the tariff value of retail price on branded readymade garments as against 60 per cent proposed in the original Budget proposal.

Mukherjee, however, retained his proposal to extend 18.5 per cent Minimum Alternate Tax (MAT) on SEZ developers and units. With regard to the proposal to reduce basic customs duty on raw silk from 35 per cent to 5 per cent, the minister said it was aimed at augmenting the supply to weavers in both handloom and the powerloom sector.

Pointing out that he had received divergent opinions on the tax initiatives for the sector, he said, "I would like to assure the House and respond, if required, to mitigate any adverse impact on the domestic sericulture sector."

Referring to the financial sector reforms, the minister said, the government proposes to pursue three more financial sector legislations --- PFRDA Bill, the Bill on Factoring and Assignment and the State Bank of India Subsidiary Bank Law Amendment Bill --- in the coming days.

Mukherjee had earlier in the day tabled, the Banking Law Amendment Bill 2011 and the Constitutional Amendment Bill for introduction of Goods and Services tax (GST). On the crisis emanating from political uncertainties in Middle East and Libya, Mukherjee said the country can withstand the impact of such crisis.

"We hope for an early and peaceful resolution of the disturbing developments in the Middle East and in Libya. I am prepared for uncertainties in the globalised world," he said.

Read more at: http://profit.ndtv.com/news/show/fm-rolls-back-5-service-tax-on-healthcare-145747?cp

Alok to generate higher ROC in future

Alok to generate higher ROC in future

March 21, 2011 (India)

Alok Industries plans to increase the proportion of polyester vis-à-vis cotton to 50:50 in the next two years from the current 25:75, to generate a higher return on capital (ROC) yield, says a top official. Alok Industries Ltd., the Rs 43.11 billion turnover (2009-10) vertically integrated Mumbai-based textiles company, is now in the final stages of capacity expansion phase, which had begun six years ago. In all the company has invested Rs 70 billion capex across all its textile verticals beginning from home textiles to clothing. Against the industry average of 3-5 percent, Alok has spent around 12 percent of its revenue to service the debt every quarter. Mr Sunil Khandelwal – Chief Financial Officer (CFO), however, is very optimistic about the future. He says, “Our operations will generate higher revenues in the next 2-3 years. At present too, we are comfortably positioned. “As far as the ROC is concerned, its about 13-14 percent as of now and we are targeting to reach 20 percent in next two years, which will be possible mainly due to full output from the existing change in product mix, by shifting to a higher proportion of polyester where ROI is very high”. Informing about the capex investments, he said, “The capex is more or less complete now and from now onwards, only a small balance sheet will be there. The impact will be felt on; our operations, which will be maximised; debt will start coming down and finally our interest rates would start coming up as an input”.

 

 

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GOVT MAY SANCTION 15 K FOR MODERNISING TEXTILES

 

 

        S K JINDAL (SR.G .M)

           

GINNI INTERNATIONAL LIMITED

 

         NEEMRANA(RAJ)

---

 

GARMENTER'S APPERAL DOES NOT FIT TEXTILE MILLS

S K JINDAL

 

SR G M (SPINNING)

Govt planning to set up yarn bank

Govt planning to set up yarn bank

BS Reporter / Mumbai March 17, 2011, 0:32 IST

The government is planning to set up a yarn bank in all powerloom centres and clusters, so that weavers could get their raw materials in enough quantity and at a reasonable price.

This would also help weavers to plan their production program in advance. Each yarn bank would cost around Rs 2 crore

The government would contribute 50 per cent as seed money and remaining 50 per cent would be borne by respective powerloom clusters, A B Joshi, textile commissioner announced at the inauguration of Texpo 2011.

As cotton prices have doubled since last August and petrochemicals prices are also rising, all yarn varieties have become costlier and sharp fluctuation in prices has prevented loom owners from planning their production. Setting up of a yarn bank, which is still in primitive stage, is expected to provide yarn to buyers at a stable price.

Yarn producers will sell yarn to the bank and buyers can approach the bank when they need it. A nodal agency could be appointed for managing the bank, said a person familiar with the development. The agency will have to make arrangement with warehouses to store the yarn sold by producers. The bank is expected to safeguard the interest of yarn manufacturers and buyers in case of sharp fall in prices.

Bank would work to bring balance between interests of sellers and users of yarn.

Powerloom contributes 80 per cent to the total production of fabric in India. Overall, there are 2.25 million powerlooms all over India, out of which more than 50 per cent powerlooms are in Maharashtra. Due to the Textile Upgradation Fund scheme, modernisation of powerloom industry was rapid, as a result, quality of powerloom fabric improved in India.

“Currently the Indian powerloom sector is in competition with China as China is facing shortage of cotton and cotton yarn. Presently, India’s market share in world’s textile and clothing market is around 4 per cent, which is likely to be doubled by 2015,” said Bharat Chhajer, chairman, Powerloom Development and Export Promotion Council.

 

 

        S K JINDAL (SR.G .M)

           

GINNI INTERNATIONAL LIMITED

 

         NEEMRANA(RAJ)