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IDBI's M Shah's expectations from Budget 2007 for textiles

Feb '07
Maitali Shah - Research Analyst IDBI
Maitali R. Shah, Research Analyst of IDBI Capital Market Services Ltd says Indian textile industry that contributes around 4% to the GDP and around 25% to the total exports of the country is eagerly awaiting the Budget 2007. The rapidly growing Indian economy is opening up new vistas for the textile industry.

The textile sector with its low labour cost and availability of raw material is geared up to cater to fastest growing home textile segment. Alongwith this, man made segment is expected to witness growth on back of swiftly changing dynamics of consumer class.

The textile industry is expecting the following out of the budget:

- It is a prerogative for the Government to draw up supportive policy in terms of Foreign Direct Investment (FDI). Only then it is possible to achieve an export target of $50b by 2010 that will require capital investment of around $15b. There is an ardent requirement to create a conducive environment that will propel FDI growth in India.

- The issue of labour law plagues the Indian textile industry. Government needs to reconsider the rigid labour laws that disallow contract labour, in light of productivity and efficiency issues in the industry.

- The industry expects the extension of the TUF scheme till 2010. TUF has enabled the process of modernization and technological up gradation of the textile industry in India. Ministry of Textiles had launched a Technology Up gradation Fund Scheme (TUFS) for the textile industry for a five-year time frame from 01.04.1999 to 31.03.2004. The scheme has since been extended till 31.03.2007.

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