The Indian Textile Sector is expecting a lot from the upcoming budget. It is being speculated that the budget 2008-09 is going to introduce several cuts in duties related to textile industry as the government will try to compensate the loss of the Indian Textile Sector, generated from negative effects of currency appreciation.
It is a well known fact that, these days, the Indian Economy is experiencing high growth rate and Indian Rupee is appreciating. But, this appreciation of Indian currency is negatively affecting the textile industry of India. To compensate the loss generated due to currency appreciation, a reduction in Basic Excise Duty(BED) can be introduced in the upcoming budget.
There is a buzz in the industry that, through the Indian Budget 2008-09, the Indian Finance Ministry is going to lower the basic excise duty on the machineries and equipments which are extensively used in the Textile Industry. It is expected that the level of BED on these textile equipments and machinery will come down to 8% from the existing level of 16%. Industry experts are also hoping that the upcoming budget may introduce a cut in import duty on textile equipments.
There is a probability that in the budget 2008-09, Indian Finance Ministry will again introduce excise duty exemption on certain crucial textile machinery, which was removed by the 2007-08 budget.
At present, all the Export Oriented Units(EOU) of the textile sector pay each type of duties on their machinery when they shift their location. The Indian Govt. is thinking over introducing some concessions in this respect, but the concessions will be given to only those EOUs which are carrying out operations for at least 10 years.
Indian Finance Ministry is also weighing the option of reducing custom duty and excise duty on Furnace Oil, which is heavily consumed by the textile industry. There are possibilities that, the excise duty on furnace oil will be lowered to the level of 8%, whereas, customs duty will be completely withdrawn.
All these options of lowering duties and extending exemptions are being considered by the Indian govt. in order to save the textile industry from the ill effects of currency appreciation.
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