All segments of the textile industry here welcomed Yashwant Sinha's announcement that the Rs 25,000 crore Textile Upgradation Fund (TUF) is being extended to include the spinning industry also.

The TUF, to be operational by April, would enable the textile industry to avail loans carrying interest incentive of 5 per cent for the next five years. The scheme became controversial as the planners had previously excluded the spinning industry from its purview.

``I am happy to hear spinning industry's inclusion (in TUF),'' was how chairman of Southern India Mills' Association (Sima) Krishnaraj Vanavarayar reacted when contacted. ``If the stand-alone spinning mills are included without any strings attached then it is welcome,''said deputy chairman of Indian Cotton Mills Federation (ICMF) B K Patodia.

Trade bodies and industry associations here had voiced their concern over exclusion of the spinning segment in TUF and it became an issue for political parties too. ``The announcement is a welcome sign and will help the textile mills to go ahead with their modernisation and expansion plans and this will benefit the textile machinery industry,'' said LMW Chairman and Managing Director D Jayavarthanavelu.

The South India Small Spinners Association (Sisspa) also had reasons to rejoice as Yashwant Sinha decided to extend the benefit of SSI exemption limits to small scale units producing cotton yarn. The SSI exemption for cotton yarn spinners was removed by the former Finance Minister P Chidambaram following representations by the big mills seeking a level-playing field.

However, the industry is sore over the rise in basic excise duty on cotton yarn from the present 5 per cent to 8 per cent following rationalisation of the excisestructure. ``This would seriously affect the working of the cotton spinning mills,'' according to President of Indian Chamber of Commerce and Industry, Coimbatore, D Dorairaj. Patodia too felt that the higher excise levy would further erode margins of the spinning mills.

Though excise duty rate structure rationalisation led to an increase in the levy for cotton yarn, the same has also helped the mills which are into blended yarn. The blended yarn rate of 18 per cent has dropped to 16 per cent. ``True, this is in tune with the Government stand to export more of cotton-based products and make blends cheaper for domestic market,'' said a senior member of Sima who welcomed the move.