A Sound Budget 2013 For The Textile Industry

The government has taken several initiatives to aid the textile sector but the broader concerns over volatility in raw material prices and sluggish export demand still continue. This doesn’t improve the overall sentiment around the sector.

These are some of the measures taken:

• Continuation of the Technology Upgradation Fund Scheme in the XIIth Plan with an investment target of Rs 1,51,000 crore of which Rs 2,400 crore will be allocated for technology enhancement.
• Allocation of Rs 50 crore to the Ministry of Textile to incentivise setting up Apparel Parks within the SITPs (Scheme for Integrated Textiles Parks) to house apparel manufacturing units.
• Working capital and term loans at a concessional rate of 6% to the handloom industry
• 0% excise duty on cotton textiles at fibre, yarn, fabric and garment stage.

These initiatives are inclined towards the promotion of revenue growth and improvement of efficiency and profitability in the sector. Also, a lower excise duty will reduce the price of end products. This will boost the garment industry, which is at the moment struck by weak consumer sentiment, low spending, low real wage growth and high inflation.

Although this provides some amount of support to the troubled industry, exports will remain subdued due to weak global macroeconomic conditions. Moreover, problems over raw material pricing continue to hover over the industry, thus keeping the outlook clouded.