Finance Minister Arun Jaitley’s announcement of duty-free entitlement for import of trimmings, embellishments and other specified items to five percent of the value of their exports, from the current three percent is a good boost for the readymade garment sector of India.

This move will help Indian manufacturers to compete with other countries in getting more orders from global retail sourcing entities, such as Walmart. As it will help bring down the cost of readymade garments meant for export by two to three percent.

Rahul Mehta, president of the Clothing Manufacturers Association of India said that the government has fixed a $50-billion textile export target for the current year. Nearly 40 per cent of this is readymade garments. The increase in duty-free entitlement will help increase export.

The government has also removed basic customs duty on specified inputs for manufacture of spandex yarn, from five percent. About Rs 100 of these inputs are imported annually. Y C Gupta, head, business and operations, at Indo Rama Industries, a leading manufacturer of spandex, the stretch material used in finished products such as stretch denim, swimwear and leggings said that they were losing to large players who were directly importing spandex yarn. They will now be at par with these companies.

The Rs 13,500-crore Tirupur industry has welcomed the Budget. Tirupur Exporters Association President A Sakthivel welcomed considering the association’s requisition for increasing the duty free entitlement for import of trimmings, embellishments and other specified items from three per cent to five per cent of the value of their exports and also highlighted the removal of Customs duty from five per cent to nil for import of specified inputs for manufacture of spandex yarn which may help to reduce the spandex yarn manufactured domestically.

He noted the garment sector was expecting an announcement of three per cent interest subvention on packing credit, which expired in March 2014, in the Budget. But there was no mention of the continuance of interest subvention in the Budget.