New Delhi: India is unlikely to offer more stimulus to the textile sector as data points to a pick-up in exports, mainly to developed countries coming out of an economic slump, the finance secretary said on Wednesday. Textiles, jewellery and leather sectors were hit hard after recession gripped developed nations in 2009, prompting government relief in the form of subsidies on bank loans and duty cuts to prevent job losses.
A recovery in domestic demand and output, coupled with inflationary pressures, have sparked a debate on withdrawing some of the fiscal and monetary stimulus.
The government will present its budget for 2010/11 on the last working day of February, and industry bodies are lobbying for extension of last year’s stimulus for another six months. “Too much of stimulus when the body is getting healthy may not be a good thing. It can be injurious to health,” Finance Secretary Ashok Chawla said, referring to industry demand for more stimulus measures.
He, however, said the government may consider tax incentives for garment machinery and extending the present easy bank lending rates.
Industry bodies have demanded that the present soft loans to textile firms should continue and government should provide an extra 45 billion rupees from the federal budget for the Technology Upgradation Fund (TUF).
The government had extended Rs250 billion to TUF until March 2010, which helped firms scale up investment worth Rs1.8 trillion in past few years.
Textile minister Dayanidhi Maran said textile exports declined by about 5% in 2008/09, due to global slump and other factors.
Overseas demand has picked up in recent months, and the minister said apparel exports may have grown 5% during April-December period from a year earlier.
Until November, production of cloth was up 10.8%, while man-made fibre output rose 21.43% and yarn 11.8%, Maran said.
With revival of domestic and overseas demand, textile firms have added 0.32 million jobs in the September quarter against job losses of 0.15 million in the previous quarter, he added.
India’s textile exports were at $21 billion during the 2008/09 fiscal year, contributing 12.5% to the country’s overall exports of $168.7 billion.