CITI Chairman P.D. Patodia said the country's most labour intensive sector was facing a severe financial crisis and that the cut in duties would have helped in reviving the industry.
He said the sector has been going down with each passing day following the rupee appreciation and escalation of interest rates.
"Both of them are the direct results of government policies," Patodia said.
Referring to the allocation of Rs.10.9 billion for Technology Upgradation Fund Scheme (TUFS), Patodia said: "This amount will not be sufficient even to service the existing TUFS loans, let alone any new ones."
"In fact, there is a backlog of over Rs.6 billion from the year 2007-08 and the requirements for 2008-09 against existing loans will amount to another Rs.11 billion. Currently, there is a delay of nearly one year in disbursement of TUFS loans and with the meagre allocation made in the Budget for next year, the delay will only increase in the coming months," he added.
Shri Patodia stated that reduction of customs and excise duties on fibres and capital goods, a mechanism for refunding state level duties to exporters of labour intensive products and a moratorium on repayment of principal amounts against term loans taken by them would have helped in reviving the crisis ridden textiles and clothing industry.
While there may be economic reasons for pursuing such policies, it is necessary to ensure that these do not result in the decimation of labour intensive industries like textiles and clothing.