Mumbai, Jan 17 (PTI) The forthcoming Budget mustprovide adequate budgetary allocation for schemes such asrefund of state levies and interest subvention benefits toimprove the competitiveness of textile exporters, domesticrating agency Icra said in a report today.
With a 13 per cent share, the textile sector is one ofthe major contributors to the country's export earnings.
However, the sector has been under pressure of late.
While, apparel exports have grown at a subdued pace due tointense competitive pressures, yarn exports have also remainedunder pressure given the decline in demand from China as wellas the country losing market share in the Chinese yarn market.
"Adequate budgetary allocation for schemes such asrefund of state levies and interest subvention benefits canhelp improve competitiveness of textile exporters and improvetextile exports growth," ICRA said in a pre-Budget note.
The country is still highly reliant on textileintermediaries for its export earnings, indicating potentialfor further value-addition and hence investment requirementsin the downstream segments, like apparel and home textiles.
The budgetary allocation for the Technology UpgradeFund Scheme (Tufs) was lowered by 23 per cent to Rs 2,013crore in 2017-18 from Rs 2,610 crore in 2016-17, a level evenlower than in 2014-15, Jayanta Roy, a senior vice-president atIcra, said in the note.
As level of subsidies available under the scheme iskey driver for investments in the sector, moderation inallocation constrains capacity additions. Accordingly, ahigher allocation towards Tufs subsidy for 2018-19 would propup investments in the downstream segments, facilitating highervalue addition and an even higher contribution by the sectorto the country's GDP as well as forex earnings, Roy said.
As per Icra estimates, apparel exports can go up by 3-3.5 times, if raw materials and intermediaries currentlybeing exported, get processed further into apparel. This hasthe potential to double the cotton-based apparel exports andincrease total textile exports from the country by 50 per centin value terms.
The sector is largely dominated by the small andmedium enterprises and faces constraints arising frominfrastructure bottlenecks and dispersed value chain,continued funding allocation towards textile parks, financialassistance and access to conducive infrastructure can enhancethe sectoral efficiencies, he said.
This in turn can help in enhancing sector'scontribution to the manufacturing as well as GDP, the reportconcluded. PTI AP BENBEN.
This is unedited, unformatted feed from the Press Trust of India wire.