Textiles Sector Receives Much Needed Support in Budget 2013-14

Textiles Sector Receives Much Needed Support in Budget 2013-14 Affordable Credit, Technology Upgradation, Duty Relief and Skill Development Targeted

The Textiles sector is the second largest provider of employment after agriculture. It contributes about 14% to industrial production, 4% to the GDP, and 17% to the country™s export earnings. It provides direct employment to over 35 million people, which includes a substantial number of SC/ST, and women. Keeping in line with the policy of inclusive growth Union budget for 2013-14, presented in Parliament by Finance Minister, Shri P. Chidambaram, on 28th February 2013 provided strong support to the sector. Apart from continuing major schemes the budget has taken many measures to assure affordable credit, technology upgradation, skill development and duty relief has been envisaged to safeguard the livelihood of the weavers and keep the industry competitive.

  • The Budget has made an additional provision of Rs. 96 crores for 2013-14 for providing interest subvention to make working capital and term loans available at a concessional interest rate of 6% (earlier this was 11% with 3% interest subvention available under the Comprehensive Handloom Package). This will benefit 1.5 lakh individual weavers mostly from weaker section and 1800 primary cooperative societies in 2013-14. This will address concerns regarding availability of credit for the handloom sector. This is over and above the provisions made in the two earlier packages, namely Comprehensive Handloom Package of Rs. 3884 crores and Revival, Reform and Restructuring Package of Rs. 2350 crores. Moreover, this comes along with a margin money support of Rs 4200 and credit guarantee of 3 years through the Credit Guarantee Trust for Medium and Small Enterprises (CGTMSE) Fund. This is perhaps for the first time that such a big policy roll out in sync with the demands of this community has been announced by any Government.
  • Technology Upgradation Fund Scheme (TUFS) has been continued in the 12th Plan with major focus on modernization of the power loom sector for which Rs. 2400 crores has been allocated in 2013-14. TUFS has been working to Improve the competitiveness and overall long term viability of the Indian Textiles Industry so that it may have access to timely and adequate capital at internationally comparable rates of interest in order to upgrade its technology level.
  • Scheme for Integrated Textile Parks (SITPs) ” a special dispensation for setting up integrated apparel Parks with in-house manufacturing units has been provided under the Scheme. An additional grant of Rs. 10 crores will now be available to each new park that is being set up under this scheme to cater exclusively to the apparel sector. Launched in previous Five Year plan, primary objective of the SITP is to provide the industry with world-class infrastructure facilities for setting up their textile units. The scheme facilitates textile units to meet international environmental and social standards. SITP has already created 61 new textile parks of international standards at potential growth centres. The Scheme is based on a PPP model where the Government of India share is restricted to 40% of the project cost or Rs. 40 crore whichever is less. The rest of the funding is arranged by the SPVs.
  • A new scheme called the Integrated Processing Development Scheme with an outlay of Rs. 500 crores will address the environmental concerns relating to the textile industry with special focus on setting up of infrastructure related effluent treatment. Environmental compliances have created new costs for the industry and this initiative will help the industry in maintaining its competitiveness.
  • The Budget has enhanced the customs duty on raw silk from 5% to 15%. This is in line with the demands of the domestic sericulture industry and cocoon farming community.
  • To incentivize exports in an environment of global slowdown, the Budget has exempted handmade carpet and textile floor coverings of jute or coir from excise duty regime.
  • Zero excise duty route in addition to CENVAT route is now available to the cotton and manmade sector and Spun yarn at the yarn, fabric and garment stages. In case of cotton, there will now be zero duty at the fibre stage and in case of spun yarn, there will be a duty of 12% at the fibre stage. This is in keeping with the Textiles Ministry™s initiative for ensuring a Fibre Neutral Textile Policy.
  • Duty on Branded Garments has been brought down to zero percent under the optional route from 3.5% earlier. This is a major initiative which would cost exchequer Rs. 1300 Crores. All the excise duty relief measures will restore competiveness of Indian exports which are under stress due to favorable treatment given to the new competitors in major markets like EU.


Tags: ExciseFinance MinisterGovernment of IndiaIndiaIntegrated Processing Development SchemeP. ChidambaramScheme for Integrated Textile ParksTechnology Upgradation Fund SchemeTextile SectorTUF

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