Mumbai: The 2010-11 Budget has been a bit of a disappointment for India’s textile industry which did not gain much except for a grant to a textile cluster in southern India while other demands remained untouched.
Finance minister Pranab Mukherjee on Friday announced a Rs200 crore grant for a textile cluster in Tirupur in Tamil Nadu state and said the government will launch a skill development programme for textile and garment sector to boost employment.
He also extended a 2% interest subvention scheme for exports covering handicrafts, carpets, hand-looms and small and medium enterprises till March 2011.
The textiles industry had sought Rs2,000 crore for the technology upgradation fund (TUFS) backlog in calendar year 2009 and another Rs3,000 crore for 2010.
Under TUFS textile units can avail of loans at concessional rates.
“From June 2009, there was no reimbursement of the TUFS subsidy as everyone is waiting for the fund allocation,” said RK Dalmia, senior president, Century Textiles and Industries.
India’s textile industry had been battered by the economic slowdown for much of 2008-09 but has begun to recover in the past 2-3 quarters with major textile firms such as Alok Industries, Raymond and Century Textiles reporting higher sales and profits in October-December.
The recovery was partly led by stimulus measures such as softening interest rates announced by the government last year.
India had last year also restored an optional 4% duty on cotton textiles beyond the fibre stage - a welcome move as firms could claim export rebate of the duty paid.
Textile makers had sought removal of duties on manmade fibres to increase utilisation in the country, as well as a 4% rise in excise duty on manmade fibres in this Budget.
Industry players have also been asking that export credit for textile and clothing units be provided at a uniform rate of 5% interest. Export credit is currently provided at about 8% interest.
However, these demands were not addressed in the Budget.
“Given the circumstances they have done a good job. For the textile industry, they have left most of the duties untouched and also extended the interest subvention by a year,” said Sunil Khandelwal, chief financial officer, Alok Industries.
“We are waiting for other details like allocation under TUFS,” he said.