The government would not offer further fiscal stimulus to the textile sector as there is a rise in exports and domestic demand, finance secretary Ashok Chawla said on Wednesday.
?Too much of stimulus when the body is getting healthy may not be a good thing. It can be injurious to health,? he said at a Ficci seminar. On the other hand, industry bodies are lobbying for extension of last year?s stimulus for another six months. The government will present the Budget for 2010-11 on the last working day of February.
However, Chawla said the government may consider tax incentives for garment machinery and extend the present easy bank lending rates. The government introduced duty cuts and provided 2% subsidy on bank loans for textile and other exports.
Industry bodies have demanded that the present soft loans to textile firms should continue and the government should provide an extra Rs 4,500 crore under the Technology Upgradation Fund Scheme (TUFS) in the current Budget. The government had extended Rs 2,500 crore under TUFS for 2009-10, which helped firms scale up investment worth Rs 1.8 lakh crore in the past few years.
Textile minister Dayanidhi Maran indicated that there was a need to modify the scheme to enable upgrading of sub-sectors using power looms. ?Sometimes, we feel that TUFS has been abused. A modification is needed in the scheme. Time has come for TUFS to be directed towards real improvement of technology,? Maran said.
Textile exports declined by about 5% in 2008-09, due to the global economic crisis.Overseas demand has picked up in the recent months and the minister said apparel exports may have grown 5% from April to December last year. Until November, production of cloth was up 10.8%, while man-made fibre output rose 21.43% and yarn 11.8%, Maran said.
With the revival of domestic and overseas demand, textile firms have added 3.2 lakh jobs in the September quarter against job losses of 1.5 lakh in the previous quarter, he added. India?s textile exports stood at $21 billion during 2008-09, contributing 12.5% to the country?s overall exports of $168.7 billion.
On the proposed Direct Taxes Code (DTC), Chawla said the government was through with the consultation process on the code that aims to make the taxation structure simpler and easier.
?The process of consultation is almost complete. Architecture will be finalised by the revenue department, and after the minister and other policy makers have given their green signal, the law ministry would draft the whole thing in the form of framework, which is the DTC,? Chawla said. The DTC is likely to be implemented from 2011-12.