Govt panel for change in subsidy norms

Govt panel for change in subsidy norms

New Delhi: Subsidies for the purchase of textile machinery should be restricted to companies that buy from domestic suppliers, according to a recommendation by a government-constituted group reviewing manufacturing policy.

But some textile companies and government officials say this is impractical.

India doesn’t produce much of the critical equipment required for the manufacture of garments and textiles, said one textile ministry official who spoke on condition of anonymity: “Indian machinery meets only one-third of the requirement. About Rs10,000 crore worth of machinery has been installed in 2007 and the Indian companies met 25% of this requirement."

Also See Equipment Supply (Graphic)

Textile companies have been benefiting from the so-called Technology Ugradation Fund Scheme, or TUFS, since 1999. The recommendation to restrict the subsidy has come from the National Manufacturing Competitive Council, or NMCC, whose mandate is to spur the manufacturing sector and lift India’s production, which has been averaging an annual 7% in the past two decades. India has nearly 700 machinery manufacturing units.

The Confederation of Indian Textile Industry, a lobby group that represents a wide section of the $52 billion textile industry, expressed concern. “This is bad news. While India produces good spinning machinery, we do not make weaving and processing machinery, and we do not have garments manufacturing machinery at all," said D K Nair, its secretary general.

“If you want to produce world-class exports, you need world-class machinery. The new suggestion is backward- looking," said Surinder Kumar Bhoan, director of the Bombay Stock Exchange-listed Nakoda Textile Industries Ltd, which posted a turnover of Rs386 crore in the first half of the current calender year. The firm, which has its plant in Gujarat, produces polyester yarn.