Extension of tech upgrade cheered

The textile sector has emerged as one of the biggest beneficiaries in this year8217;s budget. In a repeat of last year the finance minister

The textile sector has emerged as one of the biggest beneficiaries in this year8217;s budget. In a repeat of last year the finance minister has dished out a mega deal for the sector announcing the extension of Technology Upgradation Fund Scheme TUFS to the 11th five year plan while increasing allocation of funds for Scheme for Integrated Textile Parks SITP.

The FM has increased the planned allocation for TUFS from Rs 535 crore last year to Rs 911 crore this year while allocation for SITP is up from Rs 189 crore to Rs 425 crore 8211; a jump of almost 125 per cent. Further the finance minister has announced an additional 100-150 clusters in 2007-08 and allocation for health insurance scheme has also received a boost from Rs 241 crore to Rs 341 crore.

The generosity does not end here. Following up the excise duty rationalisation in the man made fibre segment last year, customs duty for polyester fibre and raw materials PTA, MEG and DMT have been cut from 10 to 7.5 per cent.

But amidst the gamut of incentives the big news remains the TUFS extension. 8220;This is a very positive development and TUFS extension was essential for the sector to receive all the projections. The customs duty cut in MMF segment will however not have much of an impact as imports will still not be that attractive,8221; said Confederation of Indian Textile Industries Secretary General D K Nair. The announcement puts to rest all doubts of a phase out of the scheme.

The sector which is the second largest employer after agriculture has been on an upswing after the removal of quotas in 2005 but extension of TUFS scheme is intrinsic to the growth momentum. The scheme has been government8217;s biggest success out of more than 50 schemes that are there for the sector. The fund provides 5 per cent interest reimbursement on loans for high-tech textile units and a further 10 per cent capital subsidy for the processing sector. Total investment under the scheme stands at Rs 46,702 crore but the bulk of this Rs 25,597 crore has come after the removal of quotas in January 2005.