Confederation of Indian Industry has suggested levying of basic excise duty at uniform rate of eight per cent across the value chain in textiles stating "it will make the sector competitive in the global market."

In its pre-Budget memorandum, CII said the textiles sector had the potential to achieve export earnings of $34 billion by 2010 but distortions in current fiscal regime, lack of labour reforms, entry/exit barriers, inadequate infrastructure and lack of bilateral agreements was making it globally uncompetitive.

Despite having certain advantages of being labour intensive, India's performance has been sub-optimal in comparison to other countries, it said, adding, "It is important to identify textiles as a priority area and build a comprehensive policy framework especially to promote value-added sales of textiles and garments."

Several other duties such as special excise duty, additional excise duty in lieu of sales tax as well as additional duties of excise also cause distortions.

The government should also extend excise duty to the entire value chain of textiles including knitting, hosiery and all such processes, which enjoy exemption as it will facilitate the complete introduction of CENVAT across the textile chain, it said.

It also demanded the reduction of SED on polyester filament to nil over the next two years and replacement of AED by VAT and scrapping of ADE.