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Textile and clothing: short of expectations

NEW DELHI: The budget proposals have been a mixed bag for the textiles and clothing sector (T&C) as even though it included several positive measures it fell short of the expectations of the industry, which had been faced with a serious problem because of a steep fall in exports due to the global economic slowdown.

A major highlight of the proposals is a substantial hike in the allocation for the Technology Upgradation Fund Scheme (TUFS) for the sector: from Rs. 1,090 crore last year to Rs. 3,140 crore for the current fiscal. Due to inadequate allocations in the past, there had been a backlog of more than one year in the disbursement of assistance under the scheme.

The hike in the provision for the current fiscal should help remedy the situation to a large extent.

The other announcements in favour of the industry include proposals to set up two more mega handloom clusters, one each in Tamil Nadu and West Bengal, and one more powerloom mega cluster in Rajasthan, in addition to the two mega handloom clusters at Varanasi and Sibsagar and two mega powerloom clusters at Erode and Bhiwandi approved in the last budget.

Further, the Finance Minister announced a proposal to re-introduce the four per cent optional excise duty for cotton textile products. This would allow the industry to once again use Cenvat credit on capital goods, dyes and chemicals, packing materials and other such products.

The Finance Minister has also proposed to restore the rate of eight per cent Central excise duty on manmade fibre and yarn on a mandatory basis and at stages beyond fibre and yarn at that rate on optional basis on the ground that these changes, along with duty changes on intermediates, would help ensure that duty on all types of manmade fibre and yarn and their intermediates would be the same and thus ease the problem of credit accumulation.

In a statement, Chairman, CITI, R. K. Dalmia, said that though there were several positive features in the budget proposals, they were not enough.

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