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Textile modernisation gets a TUF push

July 07, 2009 10:12 IST
In order to modernise the Indian textile industry, the finance minister has increased the allocation to the Technology Upgradation Fund Scheme (TUFS) by 188 per cent to Rs 3,140 crore (Rs 31.40 billion) for 2009-10 as against Rs 1,090 crore (Rs 10.90 billion) for the corresponding period last year.

"This will help clear the backlog of Rs 2,000-2,500 crore (Rs 20-25 billion) to be disbursed by the government under the scheme," said R K Dalmia, chairman, Confederation of Indian Textile Industry (CITI)

The government also reintroduced 4 per cent optional excise duty for cotton textile products to allow textile companies to use cenvat credit on capital goods, dyes and chemicals, packing materials.

However, the government did not increase the interest subvention, as demanded by the industry, though it extended the current 2 per cent subvention on interest from September 2009 to March 2010.

In order to generate jobs, the government plans to add one handloom mega cluster each in West Bengal and Tamil Nadu and one powerloom mega cluster in Rajasthan. In addition, the government will add new mega clusters for carpets in Srinagar (J&K) and Mirzapur (UP).

The textile industry wanted a rebate of up to 4 per cent on interest. "The government missed an opportunity to pull the export oriented and labour intensive textile and clothing industry out of its current crisis," said Dalmia of CITI.

The biggest disappointment was for the man-made fibre industry as the government put aside the demand of neutral duty on fibre (cotton & man-made fibre) and increased the mandatory excise duty on man-made fibre, filaments and their raw materials from 4 per cent to 8 per cent, making them costlier.

"We will pass on the cost to the buyers and it will make man-made fibre costly," said O P Lohia, chairman and managing director, Indo Rama Synthetics. India currenlty produces over 3 million tonnes of man-made fibre and 15 per cent of it is exported. "Indian mills will not be able to bear the increased cost of man-made fibre and the consumption will come down. Today is the black day for the man-made fibre industry," said V K Ladia, president, Indian Spinners' Association.

BS Reporter
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