The Hindu : National : Special package for textile sector

Online edition of India's National Newspaper
Tuesday, Mar 01, 2005

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National

Special package for textile sector

By Our Special Correspondent

NEW DELHI, FEB 28 . With the textiles sector having entered a new era following the dismantling of the export quota regime from January 1, the Union Finance Minister, P. Chidambaram, today announced a package to make it more competitive in the world market.

This includes substantial enhancement in the allocation for the Textiles Ministry's Technology Upgradation Fund Scheme (TUFS), introduction of a capital subsidy scheme for the processing sector, in addition to the normal benefits available under TUFS. While the allocation for TUFS has been increased to Rs. 435 crores from the last year's budget estimate of Rs.340 crores, the processing units would now be able to avail themselves of a 10 per cent capital subsidy.

In addition, a special package for the sector, announced as part of the 2005-06 budget, proposes to reduce the custom duty on polyester and nylon chips, textiles fibres, yarns and intermediates, fabrics and garments from 20 per cent, and that on a large number of textiles machinery from 20 per cent, to 10 per cent. The excise duty on polyester fibre would be reduced from 24 per cent to 16 per cent and independent texturizers would have the option to avail themselves of the CENVAT exemption route or pay eight per cent excise duty with CENVAT credit.

Cluster approach

It also proposes launch a programme to promote production and marketing of handloom products by adopting a cluster development approach and expanding the coverage of the life insurance and health insurance schemes for the weavers. The Textiles Ministry would take up 20 handloom clusters in the first phase at a cost of Rs. 40 crores while the insurance scheme would be expanded to cover 20 lakh weavers in two years, from just two lakh weavers. The health insurance scheme, which now covers 25,000 weavers, would be expanded to two lakh weavers.

Detailing the proposals for the textile industry, Mr. Chidambaram said: "In the last budget, I made a beginning in addressing the tax-induced rigidities in the textile sector in order to prepare the sector for the post-quota regime. There is a new vigour in the sector, especially in the handloom and powerloom segments. The Government will continue to nurture the textile sector, which has huge potential for employment and exports. "

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