Mumbai: India’s textile industry is seeking removal of excise duty and taxes, increased drawback rates and easier credit as a booster for the ailing sector.

The $52 billion labour-intensive sector is estimated to have lost 1 million jobs as the economic slowdown hurt demand for apparels and firms cut production to avoid inventory pile up.

The Confederation of Indian Textile Industry (CITI) has asked for removal of excise duties on all man-made fibres and scrapping of service tax for the sector ahead of the Union budget in July.

“Removal of duties would encourage increased utilisation of man-made fibres and this will help in correcting the mismatch in the pattern of fibre consumption between the domestic and global textile industries,” CITI said in a statement.

It sought a similar reduction in excise on all textile machinery, components and spares to a flat 4% from the current 4-8% range on machinery and 8% duty on components and spares.

Industry participants are also seeking restoration of a 4% interest rate subsidy on bank loans for exporters.

“The interest subvention of 2% may be increased to 4% and for a year,” said Sunil Khandelwal, chief financial officer of textile maker Alok Industries Ltd.

The current subvention set to expire on 30 September 2009. This should be doubled and extended till March 2010, he said.

“Duty drawback rates (on textile products) may be increased across the board by 2%.”

The drawback rates were reduced in September and now vary between 1-3% for a majority of textile products after cenvat facility is availed.

Availability of credit is another issue with textile makers and CITI has sought a two year extension of the repayment period for term loans and rescheduling of loans.

The sector has also called for rescheduling loans by deferring repayment of principal for eight quarters even though interest will continue to be paid during this period, CITI added.