These segments have been selected as garmenting provides the maximum export earnings, while the processing sector, although the weakest link, adds maximum value to garments. Investment in technical textile is needed to attract compete international players and attract foreign direct investment for capacity building, textile secretary AK Singh told FE.
Other modifications under consideration include enhanced subsidy for powerlooms and small-scale units; 25% capital subsidy for handloom sector and permission of second hand machinery only for powerloom and technical textile segments.
For this, the ministry has demanded Rs 11,000 crore under the programme by 2012, which would ensure rapid growth of these segments. The draft has been sent to the expenditure finance commission (EFC) which is expected to send its recommendations to the Cabinet soon, Singh said. The revised scheme is expected to be announced next month, Singh added.
The hike has been sought as the finance ministry had extended a Rs 976 crore package in Budget 2007-08 as compared to Rs 4,000 crore for the entire 10th Plan which is considered much below the expectations of the textile industry, especially when it is readying for massive modernisation and expansion.
The issue has already been discussed at a meeting of the National Manufacturing Competitive Council (NMCC) on June 18.
Higher allocation of funds under the scheme is expected to provide a much-needed respite to the textile industry, which is reeling under the rupee appreciation and increasing interest rate regime.
Under the TUFS an interest subsidy of 5% is given to manufacturers.