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Union Budget 2021-Key announcements for textile sector

Feb 01, 2021
Union Budget 2021-Key announcements for textile sector

Finance Minister Nirmala Sitharaman began her 2021 budget speech in New Delhi with a quote by Rabindranath Tagore. FM Sitharaman said, "Faith is the bird that feels the light and sings when the dawn is still dark.”  She said, “this moment in history is the dawn of a new era, where India is well-poised to be the land of promise and hope."

The union budget 2021 focussed on six pillars: Health and wellbeing, Infrastructure, Inclusive development, Development of human capital, Research and development, and Minimum government, maximum governance. Following are the top announcements made by the FM for the textile manufacturing sector:

·        India’s FY21 budget deficit to be at 9.5 per cent of GDP.

·        The FM announced the development of 7 mega textile parks over the next 3 years.

·        Government to offer Rs 1.97 lakh crore for PLI schemes for 13 sectors.

·        The allocation to Medium and Small Enterprises (MSME) doubled from last fiscal to Rs 15, 700 for FY22 by the government.

·        Minimum wages will apply to all categories of workers. Women to be allowed to work in all categories with adequate protection.

·        FM as a Chair of the GST Council commits to take measure to remove all anomalies such as inverted duty structure to smoothen the GST system.

·        Taking into account the rise in steel prices, the FM announced a reduction in custom duty to 7.5 per cent uniformly on semi, flat, and long products of non-alloy, alloy and steel.

·        Nylon chain to be at par with polyester and other manmade fibres (MMF).

·        FM announced uniform reduction of Basic Custom Duty (BCD) rates on caprolactum, nylon chips, nylon fibre and yarn to 5 per cent to boost textile MSMEs and exports.

·        The duty on steel screws and plastic builder wares increased from 10 to 15 per cent to benefit MSMEs.

·        FM announced rationalisation on the import of duty-free items for the benefit of exporters of garments, leather and handicraft items. Withdrawing exemption on the import of certain kinds of leathers to encourage domestic manufacturers.

·        The government raised the custom duty on cotton from zero to 10 per cent and on raw silk and silk yarns from 10 per cent to 15 per cent.

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