The Union Budget 2017-18 is a growth oriented as it will enable the manufacturing sectors to grow at a faster rate as considered by the Indian textile sector. The budget focuses on the areas like infrastructure development and youth skills development, tax reduction for MSME industrial units which will boost the local economy and create additional jobs.
Demonetisation has hit the apparel and textile sector in November 2016 and due to which it affected the economy of the Country. About 96 per cent of Micro Small and Medium Enterprises (MSMEs) in the country are likely to benefit from the 25 per cent cut in corporate tax rate for MSMEs having revenues less than Rs 50 crore. Among others, this cut is likely to affect the industry considerably, since the backbone of this industry is made up MSMEs, announced by the finance minister in his speech in the Parliament while presenting the Union Budget 2017-18.
The finance minister said, “In order to make MSME companies more viable and also to encourage firms to migrate to company format, I propose to reduce the income tax for smaller companies with annual turnover up to Rs 50 crore to 25 per cent. “
“The budget’s strong focus on human development and youth skills development will directly improve the manufacturing sector,” said BK Goenka, Chairman, Welspun Group.
The Southern India Mills’ Association (SIMA), chairman, M Senthilkumar said, “The main demand of the association of continuing the existing tax structure including the service tax and optional Cenvat route extended for textile industry till the GST is implemented has been considered in the budget.” The head of SIMA also said that the cluster approach for contract farming would greatly benefit the predominantly cotton based textile industry.
“The other benefits extended such as 5 per cent reduction in the tax for MSME industrial units, additional allocation to the banks for NPA accounts, cashless transaction, labour reform and relaxation of FDI norms by abolishing Foreign Investment Promotion Board (FIPB) would also benefit the textile industry,” added the chairman of SIMA.
“This is a budget with a positive spirit and with an intention to increase transparencies across the board. There is a lot of focus on infrastructure, housing, agriculture and rural development, which is a very good thing considering that 70 per cent of India lives in rural areas and that is where the focus of the development should be,” added Goenka.
The industry has lauded the government’s move to focus on infrastructure, housing and rural development in this year’s budget. “The objective of doubling farmers’ income, housing for one crore rural Indians, skilling of youth by establishing 100 India International Skill Centres, development of infrastructure to provide end to end solution by integrating road, rail and ship would greatly benefit the textile industry,” added Senthilkumar.
The budget’s focus on infrastructure development – within the country and also exporting it – is a very positive step, according to Goenka. “The rural focus combined with infrastructure development is what will bring about true development. The proposed launch of ‘Swayam’ in exhaustive ICT courses and ‘Sankalp’ for skill development of youth is a step that will positively impact the nation’s overall productivity in general and the manufacturing sector in specific.”
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