The Hindu Business Line : Sops for textiles and sugar

IN the last Budget, I made a beginning in addressing the tax-induced rigidities in the textile sector in order to prepare the sector for the post-quota regime. There is a new vigour in the sector, especially in the handloom and powerloom segments. Government will continue to nurture the textile sector which has huge potential for employment and exports.

The estimate of investment made in 2004-05 is Rs 20,000 crore. The estimate for the next year is Rs 30,000 crore.

The Technology Upgradation Fund (TUF) scheme is being continued with an enhanced allocation of Rs 435 crore.

I propose to introduce a 10 per cent capital subsidy scheme for the textile processing sector in addition to the normal benefits available under the TUF Scheme.

I think it is necessary to lend further help to the handloom sector. The Government proposes to adopt the cluster development approach for the production and marketing of handloom products. The Ministry of Textiles will take up 20 clusters in the first phase at a cost of Rs 40 crore, and the amount will be provided during the course of the year.

The Government is implementing a life insurance scheme for handloom weavers which provides insurance cover up to Rs 50,000. At present, only 2 lakh weavers are covered. I propose to enlarge the coverage of the scheme to 20 lakh weavers in two years which will cost Rs 30 crore per year when fully rolled out.

The Government is also implementing a health insurance package for weavers. Here too, the coverage is now only for 25,000 weavers. I propose to increase the coverage to 2 lakh weavers at a recurring cost of Rs 30 crore per year. Once the two new and enlarged schemes are approved, I propose to provide the required funds.

Sugar industry: The sugar industry has been under financial stress since 2001. The position became worse due to two successive droughts in certain parts of the country. The Tuteja Committee appointed by the Government has submitted its report. After a careful examination of the report, and after consulting RBI and Nabard, I propose the following financial package for the revitalization of the sugar industry:

Sugar factories that were operational in 2002-03 sugar season will be assisted to restructure. Nabard, in consultation with State Governments, RBI, banks and financial institutions will work out a scheme for providing a financial package with a moratorium of two years, on both principal and interest, and a schedule of payment having regard to the commercial viability of each unit.

Government has already reduced the rate of interest on loans from the Sugar Development Fund to 2 percentage points below the bank rate. I propose to make the same rate applicable to outstanding loans as on October 21, 2004.

Indian Banks' Association (IBA) and Nabard will be asked to work out a scheme under which individual sugar factories may renegotiate the rate of interest on their past high interest loans.

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