By:Shramana Ganguly Mehta


Technology Upgradation Fund Scheme Only Hope forSector; Finance Minister Unlikely To Offer Duty Relaxation


As B-Day nears, the textile industry is losing hope of anyfavourable budget. Although the $62 billion Indian textile industry knocked atthe doors of the Union Finance Minister well in time to present him with a listof demands, it expects a negative budget from Mr. Pranab Mukherjee. The sectorhoping to dock 10% growth in 2010 -11, survived the global crisis thanks to the$40-billion domestic market. However, it expects incentives to keep themomentum going.


However, with the government's primary focus beingincentives for the social sector, the textile sector does not expect any majorsteps in Budget 2010 -11. While something may come its way under the TechnologyUpgradation Fund Scheme, other demands are largely likely to be ignored, industryplayers say.



Union textiles ministerDayanidhi Maran has already expressed his displeasure at the sector seekingincentives. The minister has been insisting that players should focus onalternative export destinations and the domestic market for growth.

Awaiting Rs 4,500 crore to be disbursed to the industryunderTUFS, players in the textile sector believe that this could be the onlydemand which could get fulfilled in the forthcoming budget. The Confederationof Indian Textile Industry has sought Rs 1,500 crore to clear the backlog of2009-1 0 and an additional amount of Rs 3,000 crore for 2010-11. It is hopefulthat the FM is most likely to allocate "substantial amount" underTUFS to the industry. "While we expect FM to clear the backlog, he coulddisburse significant amount for fresh investments," said an industryobserver, requesting anonymity "However, this would be in continuation ofan old exercise and would not address the current problems being faced by theplayers trying to come out of the bad phase. In addition, the industry is a buzzwith rumours of hike in excise duty which will only add to our problems,"he added.


The industry that believes its demands of abolition ofCustoms and excise duty on man-made fibre and liquid fuel used for captivepower generation respectively. However, going by the deficit that is beingtalked about, we do not expect a positive budget for the textile sector,"added a player.


Crawling back to normalcy after two years of poor retailofftake in the global arena, Indian apparel exporters expect the FM to come outwith a pro-apparel exporter budget. The Apparel Export Promotion Council thatseeks upfront exemption from service tax for exporters, instead of refund asthe refund mechanism results into blockage of working capital for theexporters, believes that the demand is justifiable in wake of India's position in the world apparel market. "We cannot be a globally competitiveapparel exporter if our exporters do not have enough liquidity in their hands.The refund procedures are too bureaucratic. We will be reduced to an apparel-importingcountry if the policy support does not come our way, said a senior AEPCmember.


Originallypublished in The Economic Times dated: February 23, 2010