The government will set aside more money for the textiles industry because funds earmarked in this year?s Budget may not be enough to support the planned, wide-scale sector reforms.
It is understood that the corpus of the Technology Upgradation Fund Scheme for textiles may be hiked substantially from Rs 1,000 crore announced in Budget 2007-08 when the tenure of the scheme was extended to 2012. The scheme was slated to expire in March.
The fresh thinking has been triggered by a perception that the Rs 1000-crore package will be insufficient for the textiles industry, especially when it is readying for massive modernisation and expansion.
For this, the industry has been lobbying hard with the government for more funds.
Confirming the move, secretary, textiles, AK Singh said, ?The issue has been discussed at a meeting of the National Manufacturing Competitiveness Council June 18, headed by the Prime Minister.?
Singh, who was addressing an awards function organised by the Apparel Export Promotion Council (AEPC), said the revised scheme would be announced in August. But he did not say how much more would textiles get.
He just said, ?The ministry was aware of the difficulties faced by the industry because of non-operation of the scheme, rupee appreciation and increasing interest rates. The Prime Minister is positive about these and there will be good news for the industry.? Launched in April, 1999, the scheme provides 5% interest subsidy to investors.
Subsequently, the scheme also provided an upfront capital subsidy of 20% for decentralized weaving units as an alternative to the 5% interest compensation for some specified processing machines and a 10% capital subsidy. These moves had somewhat boosted the fortunes of the industry. During 1999-2000, projects worth Rs 5,074 crore were sanctioned. By March 2006, projects costing Rs 37,881 crore were cleared.