Dr. S.K. Sundararaman, Chairman of SIMA, highlights how the Union Budget 2024-25 focuses on employment, skilling, and MSMEs, benefiting the labour-intensive textile industry. The budget introduces credit schemes and tax reductions for the sector.
Coimbatore: The Southern India Mills' Association (SIMA) Chairman, Dr. S.K. Sundararaman, has welcomed the Union Budget 2024-25, stating that it brings significant benefits to the predominantly MSME-based textile industry in India. In a press release issued today, he highlighted several key aspects of the budget that are expected to positively impact the sector.
Dr. Sundararaman emphasized that the textile and clothing industry, being the second-largest employment provider after agriculture, stands to gain from the budget's focus on employment, skilling, and MSMEs. He praised the government's initiatives to strengthen the MSME segments, including the relaxation of eligibility criteria by increasing the asset value to Rs. 50 crores and annual sales turnover to Rs. 250 crores. These measures have enabled more than 80% of textile manufacturing units in the country to qualify under the MSME category.
The SIMA chairman welcomed the announcement of a Credit Guarantee Scheme for MSMEs, which will facilitate term loans for purchasing machinery and equipment without collateral or third-party guarantee cover up to Rs. 100 crores. He also appreciated the mechanism to ensure the continuation of bank credit to MSMEs during stressed periods while in the SMA stage, helping them avoid entering the NPA stage.
Another positive development highlighted by Dr. Sundararaman is the reduction of Basic Customs Duty (BCD) on Methylene diphenyl diisocyanate (MDI) used in the manufacture of spandex yarn from 7.5% to 5%. This move is expected to address duty inversion and enhance the global competitiveness of textile goods manufacturers using such yarn.
The budget's allocations for exports through RoDTEP and RoSCTL schemes, with increases of 5.8% and 10% respectively for 2024-25 compared to 2023-24, were also welcomed. Dr. Sundararaman noted that this boost is crucial when textile exports are facing a downward trend due to various external factors.
The Employment Linked Incentive Scheme, which reimburses EPFO contributions of employers up to Rs. 3,000 per month for two years for new recruits, was lauded by the SIMA chairman. He also appreciated the announcement of one month's wage to new entrants in formal sectors, payable in three installments up to Rs. 15,000.
Dr. Sundararaman highlighted that various infrastructure development announcements in roads, ports, waterways, and airports would reduce logistics and transaction costs, thereby enhancing global competitiveness. He also noted that the agricultural sector announcements would benefit cotton farmers, ultimately aiding the predominantly cotton-based textile industry.
The increase in the limit of MUDRA loans from Rs. 10 lakhs to Rs. 20 lakhs is expected to benefit small traders, handloom, and power loom weavers in the textile industry. The SIMA chairman also mentioned that the announcement of 12 industrial parks with plug-and-play facilities and rental housing with dormitory-type accommodation in PPP mode would benefit the textile sector.
In conclusion, Dr. Sundararaman stated that the budget's focus on energy security, innovation, research and development, along with regular allocations for schemes like TUF, skill development, PLI, NTTM, and PM-MITRA Park, would enable the textile industry to progress and grow.
Dr. Sundararaman emphasized that the textile and clothing industry, being the second-largest employment provider after agriculture, stands to gain from the budget's focus on employment, skilling, and MSMEs. He praised the government's initiatives to strengthen the MSME segments, including the relaxation of eligibility criteria by increasing the asset value to Rs. 50 crores and annual sales turnover to Rs. 250 crores. These measures have enabled more than 80% of textile manufacturing units in the country to qualify under the MSME category.
The SIMA chairman welcomed the announcement of a Credit Guarantee Scheme for MSMEs, which will facilitate term loans for purchasing machinery and equipment without collateral or third-party guarantee cover up to Rs. 100 crores. He also appreciated the mechanism to ensure the continuation of bank credit to MSMEs during stressed periods while in the SMA stage, helping them avoid entering the NPA stage.
Another positive development highlighted by Dr. Sundararaman is the reduction of Basic Customs Duty (BCD) on Methylene diphenyl diisocyanate (MDI) used in the manufacture of spandex yarn from 7.5% to 5%. This move is expected to address duty inversion and enhance the global competitiveness of textile goods manufacturers using such yarn.
The budget's allocations for exports through RoDTEP and RoSCTL schemes, with increases of 5.8% and 10% respectively for 2024-25 compared to 2023-24, were also welcomed. Dr. Sundararaman noted that this boost is crucial when textile exports are facing a downward trend due to various external factors.
The Employment Linked Incentive Scheme, which reimburses EPFO contributions of employers up to Rs. 3,000 per month for two years for new recruits, was lauded by the SIMA chairman. He also appreciated the announcement of one month's wage to new entrants in formal sectors, payable in three installments up to Rs. 15,000.
Dr. Sundararaman highlighted that various infrastructure development announcements in roads, ports, waterways, and airports would reduce logistics and transaction costs, thereby enhancing global competitiveness. He also noted that the agricultural sector announcements would benefit cotton farmers, ultimately aiding the predominantly cotton-based textile industry.
The increase in the limit of MUDRA loans from Rs. 10 lakhs to Rs. 20 lakhs is expected to benefit small traders, handloom, and power loom weavers in the textile industry. The SIMA chairman also mentioned that the announcement of 12 industrial parks with plug-and-play facilities and rental housing with dormitory-type accommodation in PPP mode would benefit the textile sector.
In conclusion, Dr. Sundararaman stated that the budget's focus on energy security, innovation, research and development, along with regular allocations for schemes like TUF, skill development, PLI, NTTM, and PM-MITRA Park, would enable the textile industry to progress and grow.