After seeing a stable economic increase in the second quarter of 2006-07, the growth in GDP has come to stagnate somewhere above 8.5 percent. Reasons can be attributed to a slow down in US economy which has adversely affected both exports and industrial output of handicraft and textile industry.
In order to generate high employment and sustain these negatively affected industries, the Government is expected to cater a relief package involving reduced customs & excise duty and incentives to modernize textiles making use of imported machinery.
Entrepreneurs repose confidence in the Government hoping that it will ensure demand generation, increased investments and funds availability even if it requires direct transfers and subsidies.
Authentic sources informed that the budget for this fiscal year may provide a package for six labor-intensive sectors hit most by rupee appreciation. These industries, including textiles, gems & jewelry, handloom, handicraft, and leather, are likely to be accorded excise waivers and an extension of interest rate subvention which expires in March next year.
It is believed that gems and jewelry sector, which operates on very thin margins, could get an additional special package. Excise duty on certain manmade fibres is likely to get fixed at 8 percent, while duty on leather goods may stand at 16 percent. Additionally, machines used in textile industry are in the 16 percent bracket while duty rates for leather goods are also expected to get reduced.
Optimistically, it can be considered for a while that the ongoing fiscal year may see a number of sectors emerge successfully from the stings of rupee appreciation and if the Government stands true to its words, there is no reason why the economy should stagger in uncertainty.
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