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Overall consumption of polyester to be boosted, Ashish Dhir

Feb '07
Ashish Dhir, Associate Director, Technopak Advisors speaks on the Union Budget 2007-2008.

Following were the major announcements in the Union budget today which have direct impact on textile sector. I have included our comments on these announcements.

1) Announcement: Extension of Technology Upgradation Fund Scheme (TUFS) for 11th Plan Period. Total subsidy under TUFS increased from Rs 534cr in FY2007 to Rs911cr in FY2008. Handlooms shall continue to be included under TUFS.

Our Comments: This is an excellent and much awaited news for the continued growth of textile and apparel industry in India. This will fuel more investment in the sector during this year and years to come. TUFS has received excellent response in the last 2 years and I am sure that industry will welcome this news and grab this opportunity to take Indian textile industry to dizzy heights. Inclusion of handloom will also boost investment in this sector and I am sure it will help in the overall growth of handloom sector.

2) Announcement: Customs Duty on polyester fibre and yarns (POY), MEG, PTA, DMT reduced from 10 to 7.5 percent

Our Comments: The decrease in customs duty on polyester products will result in marginal decrease in price in the domestic market, which will boost the overall consumption of polyester in India. This is a welcome news for the textile and apparel industry overall. Although, no change in excise duty on polyester will negate the impact of this reduction in customs duty to an extent.

3) Announcement: Outlay for Textile Parks increased from Rs 189cr in FY2007 to Rs 425cr in FY2008.

Our Comments: This is also a welcome step to create artificial clusters for textiles. This increased outlay of Rs Rs 236 cr this year will help in expediting the growth of these textile parks and in turn lead to more employment and revenue generation.

4) Announcement: Outlay for the Handloom sector increased from Rs 241cr in FY2007 to Rs321 crore in FY2008.

Our Comments: Handloom sector has been particularly targeted in this budget for growth. This is appreciated in the context that India is known for its handloom products and lots of efforts have been going on to promote Indian handloom products around the world. This increased outlay for handloom step is certainly a step in the right direction.

Overall Analysis: There are no major surprises for the textile sector in this budget. Extension of TUFS will go a long way in attracting investment in the sector and is the highlight of this budget for this sector. Although much more was expected from the budget, but it can be safely termed as positive budget for the Textile industry.

Fibre2fashion News Desk - India

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