Finance Minister P Chidambaram on Thursday hinted at more changes in tax structure and phasing out of subsidies for textile sector while promising measures to facilitate additional investment of Rs 1,40,000 crore (Rs 1400 billion) by 2010.
"All natural fibres are now free from excise duties, with the mandatory duty remaining only on man-made fibres. But given the direction in which I think taxation in this industry should go, you can guess where the next Budget will take us and where Budget after that will take us," Chadambram said releasing the vision statement for the sector.
He asked the textile sector to shed the mentality of getting subsidies to become competitive.
For too long, Chidambaram said the textile industry has been dependent on incentives, tax-breaks, subsidies and engaging in illegal practices.
Pointing to the investment gap between the Rs 1,40,000 crore projected in the vision statement and industry estimate of Rs 60,000 crore (Rs 600 billion) in 5-6 years, he said, "We (government) promise you to help in raising resources in India and from abroad."
But the industry should find ways of stepping up the investment to attain $50 billion exports by 2010, as against $40 billion projected in the vision statement.
The vision document, drawn up by Crisil for Indian Cotton Mills Federation, focuses on mills and powerlooms.
But Chidmabaram said the Indian textile sector was "highly fragmented" and greater attention should be paid to processing and garments, which is in the SSI sector.