The forthcoming first Budget 2014-15 of the new government in India is likely to enhance incentives to the labour-intensive textile industry which will boost its exports and manufacturing productivty.

The government may increase allocation for the Technology Upgradation Fund Scheme (TUFS) in the Budget as part of the support to the textiles sector. TUFS was launched in 1999 to facilitate modernisation and upgradation of the textiles industry by extending credit at lower interest rates to entrepreneurs both in the organised and the unorganised sector.

In its pre-Budget consultation with the finance minister Arun Jaitley, the industry has urged for a higher fund allocation under TUFS to ensure that it operates without any problems during the entire 12th Five Year Plan period. The previous government had approved the continuation of TUFS for the 12th Plan period (2012-17) with a budgetary allocation of Rs 11,900 crore. Reports indicate that the government will streamline the procedure for a timely disbursement of the fund.

Textile industry body Confederation of Indian Textile Industry (CITI) has requested the government to keep the annual allocation for the scheme at the maximum possible level in order to ensure prompt disbursement. CITI has also asked for a reduction in the excise duty from 12 per cent to eight per cent to encourage production and consumption of man-made fibres in large quantities.

Textile industry in India accounts for about 14 per cent of total industrial production, 12 per cent of exports and 4 per cent of GDP of the country. The industry, employing about 45 million workers, is valued at US$90 billion, of which, nearly US$40 billion is from exports.