Arvind Mills Ltd – Budget Reactions

The proposed budget has announced leapfrog changes in Indirect Taxes especially addressing long awaited reductions in CENVAT Rate to 14%, reduction in Excise Duty for Pharma and automotive sector and selective changes in Customs duty. Reduction in Excise Duty will certainly be anti- inflationary, but importantly along with higher disposable income will spur growth in domestic consumption that will be the driver for growth and investment in Manufacturing Sector. CENVAT reduction also reaffirms moving forward to a moderate rate GST by 2010.

However, it has been a modest budget for Textile Industry maintaining Staus-quo when Industry is reeling under pressure due to stronger Rupee. Having accomplished the Excise Duty as well as Custom duty reforms for the Industry, reduction and rationalization of Import Duty on Cotton to 0% was expected to provide relief when Cotton prices rule all time high. Labour Intensive Industry like Textile and Leather where Exports declined for the year by 22% due to strong Rupee were expecting relief measures, besides correcting the fiber import duties. Thus, budget has disappointed the Industry.

I feel confident that Socio-Economic stimulus with focus on skill building and health care will go a long way in 'Bharat Nirman'.

Source: yarnsandfibers.com