Textiles dipped in reforms dye

Announcing the textile policy changes, Textile Secretary Anil Kumar said theidea behind the policy was to increase India8217;s export potential five-fold inthe next ten years from 11 bn today to 50 bn. And half of this target isto be met by garment exports.

Today, with garments produced only by the small scale sector with acapital ceiling of Rs 3 crore the quality remains quite poor. The problem,however, is that buyers abroad are now demanding much better quality, andalso expect suppliers to have state-of-art computer coding and othersystems. None of this, however, can be done within the small scaleinvestment limits. Today8217;s decision will now open up this sector to largeorganised manufacturers, both Indian and foreign.

The government, however, failed to announce any concrete measures on how itplans to boost productivity in this sector, nor did it announce any measuresto take care of the excess labour problem that plagues the industry, ordetails of the technology mission and fund it planned to help theindustry.

Significantly, for the second time in a row, the Cabinet did not approve therollback in oil prices that Railway Minister and mercurial ally MamataBanerjee had been demanding and had quit over. While Mamata met Vajpayeelast night to remind him of the matter, and insisted that Finance MinisterYashwant Sinha had requested for some more time to decide on it in today8217;sCabinet meeting, the official spokesperson had something quite different tosay. Parliamentary Affairs minister Pramod Mahajan told the press that theoil rollback was not even on the agenda: 8220;Like last time, Cabinet did notdiscuss the issue. If it was on the agenda, you would have known aboutit.8221;

Other significant decisions taken by the Cabinet include deferring a hugesubsidy package proposed by Food Minister Shanta Kumar. Kumar hadrecommended giving food to the poorest-of-the-poor either free, or at pricessubstantially lower than the current price charged to Below-the-Poverty-Linepeople. Since the scheme is likely to cost several thousand crores, adecision on it was deferred. Sources, however, indicated that the scheme mayget cleared the next time around.

At a conference of venture capitalists from the Silicon Valley in the US,Finance Minister Yashwant Sinha also announced a major tax sop for venturecapitalists. Till now, to qualify for tax breaks, venture capitalists had tosell their stake in firms within 12 months of them going public. This, abeaming Sinha said, had now been removed.

Policy Punch