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The Indian Textile Journal - March 2010 Viewpoint
A Very Few Bouquets

The 2010 Budget has, more or less, brought more disappointments than cheers to India's textile industry. Specific proposals like the provision of a one-time grant of Rs 200 crore to the Government of Tamil Nadu towards the cost of installation of a zero liquid discharge system at Tirupur to sustain country’s hosiery exports from Tirupur, launching of extensive skill development programme in the textile and garment sector by leveraging the strength of the existing institutions and instruments of the Textile Ministry are expected to go a long way in addressing the manpower and manufacturing needs of this labour intensive sector. The Union Budget for 2010-11 has extended the 2% interest rate subvention scheme for exports covering handicrafts, carpets, handlooms and small and medium enterprises till March 2011. A small crumb of comfort against big expectations of the textile industry, which has successfully weathered the recession in the last two years, but still not out of the woods completely. Industry players had also high hopes of getting export credit for textile and clothing units at a uniform rate of 5 per cent interest. This has been belied in the current Budget proposals. Export credit is currently provided at about 8 per cent interest.

Besides, the industry has a few grouses regarding Textile Upgardation Fund Scheme (TUFS). Since June 2009, there was no reimbursement of the TUFS subsidy as everyone has been waiting for the fund allocation. The textiles industry had sought Rs 20 billion for the TUFS backlog in calendar year 2009 and another Rs 30 billion for 2010. Synthetic textile industry has sought removal of duties on manmade fibres to boost utilisation in the country. This has been ignored. The service tax rate has been retained at 10%, while the exporters were pinning hopes on total exemption of service tax on export related services as the current refund mechanism is cumbersome. All these have made the Budget exercise far from being exporter-friendly for an industry, which to a large extent depends on exports to wriggle out of recession.

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