WHAT ARE THE OTHER POLICIES SUPPORTS GIVEN TO THE SECTOR?

Rationalization of the excise duty regime - The inverted duty structure that prevailed earlier with higher duties for fibers and filaments and lower for fabric has been rectified to some extent.

Although the optional zero duty route for the cotton value chain has helped a large number of yarn and fabric manufacturers , excise duty route is still adopted by a lot of people in order to take cenvat credit for expenses made on dyes and chemicals, packing and other inputs.

Custom duty - Between 2005-06 and now, custom duty has been progressively reduced from 20% to 10%. For textile machinery it has been further reduced to 5%, since 2005-06, for specified items.

Incentives in 2008-09 through various stimulus packages :

Across-the-board cut of four percent in the ad valorem central value-added tax effected from Dec 2008.

Interest subvention of two percent on export credit for labour intensive sectors was restored in Dec 2008, after withdrawal in September 2008.

Full refund of service tax paid by exporters to foreign agents was another provision added in the December stimulus package.

Limits under the credit guarantee scheme for small enterprises doubled in December stimulus package. Besides this, lock-in period for loans to small firms under credit guarantee scheme reduced.

Import duty on naphtha for use by the power sector reduced to zero. This may have some indirect benefit to the industry through cheaper power.

In Feb 2009, reduction in excise duty and service tax by 2% was announced.

FDI liberalization

AEPC with the assistance of government has come up with a scheme for mobilization of FDI into India in textile and garment sector