What the Budget does
- Schemes for Integrated Textile Parks (SITP) and the Technology Upgradation Fund (TUF) to be continued in the Eleventh Plan period. Provision for SITP to be maintained at Rs 450 crore in 2008-09.
- Provision for TUF to be increased to Rs 1,090 crore in 2008-09 from Rs 911 crore in 2007-08.
- 250 clusters being developed and 443 yarn banks established under the cluster approach to the development of the handloom sector.
- Over 17 lakh families of weavers to be covered under the health insurance scheme by March 2008. Allocation for this purpose being increased to Rs.340 crore in 2008-09;
- Infrastructure and production being scaled up by taking up six centres for development as megaclusters. Varanasi and Sibsagar to be taken up for handlooms, Bhiwandi and Erode
- for powerlooms, and Narsapur and Moradabad for handicrafts. Each mega-cluster to require about Rs 70 crore. Initial provision of Rs 100 crore made in 2008-09.
- National calamity contingent duty (NCCD) of 1% removed on polyester filament yarn and the levy shifted to cellular mobile phones.
- General CENVAT rate on all goods reduced from 16% to 14%.
Impact on sector
- Additional allocation to TUF to accelerate the capital investment in the textile sector.
- Continuation of schemes for Integrated Textile Parks (SITP) to attract additional investment in this sector.
- Clusters for yarn, handloom, handicraft and powerloom to bring more pricing power to these unorganised segments of the textile sector.
- Health insurance schemes for weavers to offer protection to employees in the unorganised segments of the sector.
- Removal of national calamity contingent duty (NCCD) of 1% on polyester filament yarn to benefit the companies that have spinning capacities.
Also read: How Budget affects your stocks
Impact on companies
- Additional allocation to TUF will help companies like Alok Industries and Welspun India to accelerate their capex plans
- Continuation of schemes for Integrated Textile Parks (SITP) to benefit Alok Industries
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