President Message

Raja M Shanmugham


TEA President

The Hon’ble Union Minister of Finance Shri. Arun Jaitley advanced the Union Budget 2017 -18 presentation date to 1st February 2017 this year against the usual presentation date of 28th February and another maiden attempt was merging Railway Budget with Union Budget. The Government stated that the advancement in presentation of the Budget would facilitate execution of development works by giving more time for allotment of funds and their spending.

 

I welcome the inclusive, growth oriented Union Budget 2017 -18 and wish to note that the reduction of the Income Tax to MSMEs from 30% to 25%, which is an encouragement to the clusters like Tirupur, as more than 80% of MSMEs are in Tirupur. The increase in amount will help the exporters to take an appropriate decision either for making investment for capacity expansion or else for investing in backward integration, as this is crucial for the MSMEs to reduce their cost of manufacturing and stay competitive in the global market.

 

 

The announcement on allocation of fund for affordable housing scheme is quite encouraging which has been requested by us as we have decided to construct one lakh houses to the labours in surrounding areas of Tirupur.  I also appreciate the profit exemption announced for construction of 60 sq.m. as that will encourage more promoters to enter for construction of houses. While welcoming on the announcement of labour reforms, I wish to note that the labour reforms is pending for two years despite the earlier announcement and I appealed to expedite the reforms for the benefit of clusters like Tirupur.  The enhancement of allocation of fund to Mudra Bank from Rs.1,36,000 crore to Rs.2,44,000 Crore which encourage the new entrepreneurs and beneficial to Tirupur as start-up companies in the Micro and Small Enterprises are making investment in the Knitwear sector. I welcome the allocation of fund of Rs. 2,200 Crores for labour skilling as this will be beneficial to Tirupur cluster when the upskilling of workers is taking place which is necessary for the improvement of industry and growth of exports. I also welcome the reduction of Income Tax for the salaried class from 10% to 5% for those with income up to rupees five lakhs.

 

I have a concern on allocation of fund for Rebate on State Levies (ROSL), since in the revised estimates of Budget 2016-17, only Rs.400 Crore has been allotted which is insufficient as the total apparel exports from the date of notification 20th September 2016 to 31st March 2017 would clock around Rs. 53,000 Crore and even if 3% of Rebate Rate is calculated, it works out to Rs. 1,650 Crore.  I understand that in the third week of February, the Textile Ministry has sent the allocated ROSL amount of Rs.400 Crore to the Drawback Department and the issue is that the Drawback Department has received the claims more than Rs.1000 Crore since 20th September 2016 and in view of this, we have requested the textile ministry to seek additional allocation of Rs.1000 Crore from the Ministry of Finance to settle the claims hassle free. In the meanwhile, we have also represented to the Hon’ble Union Minister of Textiles, Secretary, Ministry of Textiles pointing out the lower allocation of fund for ROSL for the period from 20th September 2016 to 31st March 2017 and requested to use their good offices for additional allocation of fund.  We also understand from Ministry of Textiles that the fund allocation of Rs.400 Crore is only for the months of February and March and for the period 20th September 2016 to 31st January 2017, the Ministry of Textiles has been negotiating with Ministry of Finance and it may be announced soon.  Moreover, the Made Ups export sector has also been included to avail this benefit and considering the requirement, we hope the Ministry of Finance would allocate additional amount to settle the claims.

 

More importantly, the Budget allocation for ROSL in the next year Budget is Rs. 1,555 Crore and we see the Government has allocated the lower amount after considering the implementation of GST from 1st June 2017 onwards.

 

In the ATUFS front, the allocation of fund for ATUFS has been reduced to Rs. 2,013 Crore for 2017-18 against Rs. 2,610 Crore allotted in the revised Budget 2016-17 and I expect that the reduction in allocation should not be a constraint in getting the Interest reimbursement / Capital Subsidy in time for the entrepreneurs who availed loan under the previous TUF Schemes including ATUFS.

 

Regarding PMPRPY Scheme, I wish to note that there has been no allocation of fund under PMPRPY scheme in the revised Budget 2016 -17, though the scheme came into effect from 8th August 2016. As on date, 160 units in Tirupur cluster have submitted the applications and 133 applications have been validated and the total number of employees newly recruited were 28,267. The units are now expecting the reimbursement of the employer’s contribution and wish to know the direct contribution from the government instead of reimbursement.  We have already made a representation to the Government for allocation of fund to reimburse the amount. However, in the Union Budget 2017 -18, the allocation made for implementation of this scheme is Rs.200 Crore.

 

I am happy to note that the Economic Survey 2017 released by Government of India has, for the First Time, focused specially on Apparel and Leather Sector by introducing a separate chapter for those sectors, considering their role in the economy in providing exports and employment. While appreciating the unique move of Government of India, I wish to note that the survey has apparently pointed out the constraints that keeps our country lagging behind our competitors in the apparel sector and suggested the need to remove those bottlenecks enlisted through a focused approach. As per the long requisition of our Association, the survey also emphasized the need to address labour law reforms, which is the paramount importance for the exporting units as they must fulfil the compliance norms being insisted by foreign buyers. Another suggestion given by the survey for the growth of apparel export is expediting FTA with US and EU to remove the tariff barriers and have a level playing field with competing nations and wish to add that the survey has also stated that after having Free Trade Agreements with EU and UK, the apparel exports would increase by US $ 2 bn and the employment by 1,10,000, mostly women employees. I hope as the Economic Survey itself has laid the road map for the growth of apparel exports, the Government would go ahead and remove the constraints blocking the FTA and expedite the FTA / PTA with EU and UK considering the exports and employment and fulfil the outcome expected while making announcement of Special Package for apparel sector on 22nd June 2016.

 

I fully endorse the positive impact of the demonetization stated in the Economic Survey and hope there will be elimination of unethical business from the trade and the fittest will survive in the market. 

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