The textile sector, which had been struggling to keep its head above the water following the global economic slowdown, has got another breather with Finance Minister Pranab Mukherjee announcing a series of initiatives to support the sector as part of the budget proposals for 2010-11.
The package for the industry includes extension by a further period of one year for the interest subvention of 2 per cent on pre-shipment credit for export of handlooms, handicrafts, carpets and for the products of small and medium enterprises.
Another key element is the proposal for launching of an extensive skill development programme at a outlay of Rs. 2,124 crore by the Textile Ministry in collaboration with the private sector.
Welcoming the package of initiatives, Textiles Minister Dayanidhi Maran said the measures along with the proposal to set up a National Security Fund for unorganised sector workers, including weavers, and moves to recapitalise the regional rural banks and to double the corpus of the micro finance development equity fund should help give a major boost to the sector.
Apparel Export Promotion Council Chairman Premal Udani welcomed the various initiatives outlined by the Finance Minister, but at the same time expressed disappointment that he had not provided any short or long-term road map for the growth of the apparel industry.
He lamented that the Finance Minister had not agreed to exporters' plea for exemption of service tax and complained that the increase in excise duty along with the increase in prices of petrol and diesel would cause substantial increase in raw material and input costs.
Export Council for Handicrafts Chairman Raj Kumar Malhotra also welcomed the package of initiatives and, at the same time, expressed disappointment that the Finance Minister had not considered the ‘major' issues of Sec. 10 B (A) relief for exemption of income-tax, relief of import duty for tools and fixtures and a relief on service tax for membership of the council and participation in fairs and exhibitions.
The Confederation of Indian Textile Industry welcomed the package, including retention of the optional route for the entire textile value. But, in the same breath, expressed disappointment that excise duty on manmade made fibres and their products had been increased from 8 per cent to 10 per cent.
Urging the Finance Minister to at least revert to the original level, CITI Chairman Shishir Jaipuria pointed out that considering that policy inputs were required to correct the mismatch in the fibre consumption pattern between India and the global markets, there was more a case for reducing rather than increasing the tax burden on manmade fibres.