INDIA: Impact of budget on textile sector

Expectations of textile sector from this budget08 was:

1. Additional TUF provision
2.Provide ways to utilise CENVAT credit.
3. Reduction in duties on polyester fibre.
4. Reduction of custom and excise duties on textile machinery.
Budget 08 is fail to fulfill textile sectors  expectations. Actually what the budget does is:

1. Provision for Technology Upgradation Fund (TUF) for textiles will be increased from Rs 911 crore to 1090 crore in 2008-09.
2. National calamity contingent duty of 1% removed on polyster filament  yarn and the levy shift to cellular phones.
3. Schemes for integrated Textile Parks (SITP) and TUF to be continued in the Eleventh Plan Period. Provision For SITP to be maintained at Rs 450 crore.
4. Over 17 lakh families of weavers to be covered under  the health insurance scheme by March 08. Allocation for this purpose  being increased  to  Rs 340 crore in 08-09.
5. Infrastructure and production being scaled up by taking up six centres for development as megaclusturesto require about Rs 70 crore, initially provision of Rs 100 crore made in 2008-09.

This shows that the additional allocation of TUF is made to acclerate the capital investment. The continuation of SITP is to attract additional investment in textile sector. cluster for yarn, handloom, handicraft and powerloom to bring more pricing power to this unorganised sector. NCCD of 1% removed on polyester filament yarn to benefit the companies tha have spinning capacities.

Their are few industries which will get benefit from additional allocation to TUF and continuation of SITP to accelerate their capex plans like Alok Industries, LMW and Welspun.

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Added: March 1, 2008 Source: Agencies
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