Budget 2022: Lessen tax burdens, remodel rigid regulatory compliances to enable growth, expansion of textile sector
Union Budget 2022-23: The domestic textile and apparel industry contributes to 2 percent of the GDP of the country
India has one of the most attractive textile and apparel markets in the world as there is a comparative advantage when it comes to skilled manpower and production cost. It is also the sixth-largest exporter of this market in the world. A recent report by Invest India stated that the domestic apparel and textile industry in India contributes 5 percent to the country’s GDP, 7 percent of industry output in value terms, and 12 percent of the country’s export earnings.
Recognise farmers of natural fibres as part of agri sector
The domestic textile and apparel industry contributes to 2 percent of the GDP of the country. It is also the second-largest creator of employment in the country, after agriculture. To strengthen, invigorate and motivate this sector, India needs to recognise its farmers of natural fibres as an integral part of the agricultural sector. It is critical to attain synergy between technology and public policy, as well as to suggest appropriate measures for increasing income and employment opportunities.
The government needs to invest in scientific methods of preventing crop failure at the early disease level which will ultimately increase the overall yield. Application of AI sensors and IoT devices can accomplish solving numerous problems for farmers and saving a profitable resource to get higher yields and better quality with less resources. Additionally, information technology for market, weather, credit, and e-commerce, as well as training could turn the country into a significant game-changer in the world's textile and apparel industry.
Taxation and benefits
The proposal for GST hike for the textile industry has been deferred, which is a relief as thousands of small businesses. The pandemic has disturbed the entire chain of trade and a lot of farmers, weavers, reelers have been pushed into debt to make ends meet. Small scale manufacturers must be acknowledged as they are engineers of their own merit. Government must consider extending credit facilities to them and provide means for new-age technology adoption. Affected units and small-scale weavers would hugely benefit from such progressive measures. Besides, allocations for R&D would also make way for greater production quality and enhanced efficiency in all sectors.
At the seller level, tax burdens and rigid regulatory compliances should be remodelled, which can provide scope for growth and expansion. This will increase ease of doing business and can largely contribute to the GDP.
Finance at tipping point
The government has not passed subsidies through private companies and instead given that task to state government. Due to this, farmers and other agro-stakeholders are compelled to work with marketplaces allocated by state government, thereby prohibiting them from working with a private operator. These private players are forced to reduce their own margins to support the stakeholders.
Secondly, from the NBFC’s standpoint, silk and some other natural fibres are not a part of Priority Sector Lending (PSL) in the Indian ecosystem. We need to work towards showcasing weight towards the sector by putting the entire value chain of natural fibres under the PSL which will lead to tremendous benefit for all stakeholders.
Banks have a mandate to target the priority sector, and small financing banks must allocate approximately 75 percent of their credit to it. There is an expectation that the priority sector which is not defined precisely, will be resolved, and standardised over the next financial year. Along with that, the government must provide subsidies to private players for the overall growth of the sector.
While the government has been advocating and supporting the traditional handloom and handicraft sectors for improving production and generating employment, we are looking at Budget 2022 for creating a thriving and healthy industry across the entire value chain from fiber, yarn, fabric to apparel amid the COVID pandemic.
The author is founder and CEO, ReshaMandi- silk agritech startup.
Read all the Latest News, Trending News, Cricket News, Bollywood News,
India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.
Biden pitches billionaires, corporate tax hikes in budget
President Joe Biden presented Thursday what amounts to his 2024 reelection pitch on the US economy, with a proposed budget targeting the rich with new taxes, while promising to assist the country’s “working families.”
United Nations Security Council needs urgent reforms, says Om Birla
UNSC reforms cannot be stopped forever and the reforms are on India's global agenda, Om Birla said
Biden throws down 2024 gauntlet with populist budget
Republicans in Congress will certainly block most of Biden's proposals, arguing that spending cuts, not tax raises, are the solution to resolving the country's ballooning debt.