There won’t be any further fiscal stimulus for the textile sector as the exports are growing and domestic demand is strong. Exports mainly to the developed countries have improved as they are coming out of recession, indicated finance secretary Ashok Chawla on Wednesday.

Government offered subsidies on bank loans and duty cuts to avoid job losses when the textile sector along with jewellery and leather were affected by the slump in demand from the developed countries. A growing domestic demand, high output and inflation have some policy makers believe that it is time to begin the withdrawal of the soups.

Industry groups want the government stimulus to continue for another six months.

Addressing the demand the Finance Secretary said, "Too much of stimulus when the body is getting healthy may not be a good thing. It can be injurious to health."

However, he said that the continuation of tax incentives for garment machinery and the easy bank lending rates could be considered by the government.

Direct Taxes Code (DTC) is aimed at making the taxation easier and simpler, indicated by the finance Secretary, adding he said “The process of consultation is almost complete. Architecture will be finalised by the revenue department, and after the minister and other policy makers have given their green signal, the law ministry would draft the whole thing in the form of framework, which is the DTC.” He expects he code to be implemented from 2011-12.

Industry bodies demanded additional 45 billion rupees for the Technology Upgradation Fund (TUF) in the union budget and the continuation of the present soft loans to textile firms as the government is to present the Budget for 2010-11 on the last working day of February.

The government has already infused 250 billion rupees to TUF until March 2010, which helped companies scale up an investment of 1.8 trillion rupees in last few years.

Expecting a 5% growth in Apr-Dec 2009 year on year as the demand picks up in the international market, the textile Minister Dayanidhi Maran noted that the decline in textile exports for the year
2008/09 was 5%.

Textiles firms added over 0.32 million jobs in the September quarter against job losses of 0.15 million in the previous quarter as the domestic and international demand show signs of a revival, indicated Maran.

During the fiscal year 2008/09, India exported textile worth USD 21 billion making 12.5% of the countries overall export.