The revision in classification of MSMEs in the Budget will be a blessing in disguise for the textile industry which is dominated by small businesses.

While presenting the Budget, the Finance Minister Nirmala Sitharaman said “To help MSMEs achieve higher efficiencies of scale, technological upgradation and better access to capital, the investment and turnover limits for classification of all MSMEs will be enhanced to 2.5 and 2 times respectively.

To improve access to credit, the credit guarantee cover will be enhanced for Micro and Small Enterprises, from ₹5 crore to ₹10 crore, leading to additional credit of ₹1.5 lakh crore in the next 5 years. Investment made to be classified as micro enterprises has been enhanced to ₹2.5 crore from ₹1 crore.

Similarly for small enterprises the investment limit has been enhanced to ₹25 crore from ₹10 crore while turnover has been marked up to ₹100 crore from ₹50 crore.

For medium enterprises, the investment and turnover criteria has been increased to ₹125 crore and ₹500 crore from ₹50 crore and ₹250 crore.

Currently, over 1 crore registered MSMEs, employing 7.5 crore people, and generating 36 per cent of country’s manufacturing, have come together to position India as a global manufacturing hub.

Bhadresh Dodhia, Chairman, MATEXIL (Manmade and Technical Textiles Export Promotion Council) said one of the key highlights of the Budget is the revision of classification criteria for MSMEs, both in terms of investment and turnover.

Nearly 80 per of the textiles sector operates within the MSME clusters, and this revision would empower these units to achieve scale, enhance competitiveness and contribute significantly towards making India a global manufacturing hub for textiles, he said.

Additionally, the Budget has introduced important amendments in the Basic Customs Duty rates on knitted fabrics, covered under nine tariff lines. The revised rates have been changed from 10 per cent to “20 per cent or ₹115 per kg, whichever is higher.” 

Furthermore, two more types of shuttle-less looms have been added to the list of fully exempted textile machinery. These moves would enhance the  textile sector’s export competitiveness, said MATEXIL chief.

The increased fund allocation for key government schemes such as RoDTEP (Remission of Duties and Taxes on Exported Goods), RoSCTL (Rebate on State and Central Taxes and Levies), and Production-Linked Incentive (PLI) Scheme for Textiles will also help the industry, said Dodhia.

He expressed confidence that these initiatives will boost the export potential of manmade fibre and technical textiles besides strengthening India’s position in  the global markets.

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