An Inter-Ministerial Steering Committee (IMSC) of Government of India will be meeting on February 2, 2012, to discuss issues related to the implementation of the new Technology Upgradation Fund Scheme (TUFS) for the textile sector.
The meeting assumes significance as the Central Government is planning to give some subsidy to the ailing textiles sector with retrospective effect.
The textiles industry is the second largest manufacturing sector in India and is currently facing declining demand due to uncertainties in its major export markets.
In addition, the Government of India's decision to allow duty-free import of 48 textile and garment items from the neighbouring Bangladesh has also impacted the country's textile sector.
Moreover, the industry has been reeling under debt owing to high volatility in cotton prices last year. Around 122 of the 287 companies listed on the Bombay Stock Exchange (BSE) had reported net loss in the first quarter of 2011-12, according to the Confederation of Indian Textile Industry (CITI).
It is estimated that loans taken by textile industry in the country amount to Rs. 1,000 billion, most of which have been raised from the public sector banks.
The Indian Government sanctioned a budget of Rs. 19.72 billion during the current fiscal under its restructured TUFS, but the interest waiver scheme was not taken advantage of by the industry, which was already facing severe cash crunch.
The new TUFS envisages 5 percent interest waiver for any company that invests in setting up a new plant during the current fiscal. The Ministry of Textiles expected that the industry would leverage an investment of Rs. 469 billion, but so far only Rs. 1.4 billion of subsidy has been availed.
Mr. DK Nair, Secretary General of CITI, told fibre2fashion, “The IMSC meeting may consider the possibility of TUFS being made available to the textiles industry for the period June 2010 - April 2011, during which neither the erstwhile modified TUFS nor the new restructured TUFS was in operation.
Apprising about the agenda of the meeting, he says, “The meeting has an elaborate agenda, since it is a regular meeting of the IMSC on TUFS. In addition to retrospective implementation of TUFS, a proposal for debt restructuring of the textile industry is also expected to be discussed.”
Briefing further about the meeting, he adds, “The IMSC meeting is scheduled to take place on February 2, 2012 in New Delhi. It will be chaired by Mrs. Kiran Dhingra, Secretary in the Ministry of Textiles. Representatives from Finance Ministry, RBI, Planning Commission and major banks will attend the meeting, in addition to industry leaders, including Chairman, CITI.”
Fibre2fashion News Desk - India