With India?s export-oriented textiles industry among the worst hit by the global economic downturn, the government has thrown it a lifeline by promising to release within three days Rs 2,546 crore in overdue subsidies under the Technology Upgradation Fund Scheme (Tufs). This is the single-largest subsidy tranche released under the scheme to date and will reimburse textile firms for investments made up to June 30 this year.
?The (subsidy) amount will be credited to the bank accounts of more than 12,514 beneficiaries in 72 hours. During the slowdown, it will help the industry,? textiles minister Dayanidhi Maran said on Thursday.
While admitting that the industry is still suffering from job losses, Maran added, ?The unemployment rate is lower than that of the gems & jewellery sector.? But a survey by the Labour Bureau has found that the textiles sector shed 1.54 lakh jobs in the first quarter of 2009-10?far higher than the 20,000 job losses recorded in the gems & jewellery sector in the same period.
The textiles industry said the Tufs announcement would cajole reluctant bankers into disbursing loans. ?We were unable to meet working capital requirement as banks were unwilling to release funds. Now, they will,? Confederation of Indian Textiles Industries? chairman RK Dalmia told FE.
According to the ministry?s data, apparel exports have been dwindling in the last seven months. In the first quarter of 2009-10, they dropped 15.4% to $2.41 billion, compared with $2.85 billion in the same period last year. ?We don?t have export orders beyond the next three to four months. Countries like Bangladesh and Vietnam are bagging our orders due to higher government assistance to them,? Dalmia pointed out.
Under Tufs, the government subsidises new machinery and equipment for textile companies. In Budget 2009-10, allocation to the scheme was raised 188% to Rs 3,140 crore. With most of it now exhausted, Maran has promised to approach the Prime Minister and finance minister for more funds.
The minister also set up a working group under textiles secretary Rita Menon to formulate a national fibre policy and outline steps necessary to augment investment. ?The group will submit its report in three months and a policy will be announced by year end,? Maran promised.