Date:07/07/2009 URL: http://www.thehindubusinessline.com/2009/07/07/stories/2009070750042700.htm

Back Textile industry feels disappointed

A file picture of a powerloom

Our Bureau

Ahmedabad, July 6 The textile industry received this Budget with mixed feelings. Mr Sunil Khandelwal, Chief Financial Officer, Alok Industries Ltd, summed it up “It is positive that they have not introduced anything negative, and so I would call it a neutral Budget,” while Mr S.K. Gupta of Raymond Ltd said they needed more time to study it properly.

The two per cent interest subvention on pre-shipment credit has been extended to March 2010 from September 30 and is expected to provide some relief to exporters hit by the slowdown in the economic market. But the lack of measures or roadmaps to address the current slump in the textile industry due to shrinking of the overseas market, disappointed many.

“We would have been happy had a road map for recovery been provided by the Government but it wasn’t,” said Mr Premal Udani, President, Clothing Manufacturer Association of India.

While most welcomed the setting up of mega clusters for handloom and powerloom in Tamil Nadu, West Bengal and Rajasthan, Mr Udani pointed out that most clusters in existence are not operating well and key issues should be addressed first.

The restoration of the central excise duty on a mandatory basis from four to eight per cent on man-made fibre and yarn; and on stages beyond fibre and yarn, at that rate on optional basis was not received well by the industry. “It is a retrograde step, it will only push up costs,” said Mr Udani.

Mr Khandelwal added that prices of polyester end-products would go up by one to two per cent due to this. “The behavior of BSE and NIFTY itself shows that the budget has not been much appreciated by the investors,” said Mr Ganesh Kumar, Chairman, Synthetic and Rayon Textiles Export Promotion Council.

The allocation under Market Development Assistance Scheme that provides support to exporters in developing markets was enhanced by 148 per cent over 2008-09 to Rs 124 crore from Rs 50 crore. But considering India’s export scenario, this is a very small amount, according to Mr Kumar. He welcomed the scrapping of FBT and CTT but added that beggars cannot be choosers. Mr Khandelwal was more optimistic and said that in the light of Government’s deficit of 6.2 per cent, it was a credible budget. He expects more from the EXIM policy, which would be in a better position to address the textile industry’s needs than the budget, he said.