The textile sector, has not yet showed any sign of recovery, according to an Assocham Eco Pulse (AEP) study titled ‘India Textile Scenario’ shows that the textile sector, which provides employment to about 91 million people, contributing about 13% to export earnings and 4% to India’s GDP, is still suffering from the global slowdown as indicated by declining exports and massive layoffs.

Assocham says that despite marked improvement in the financial position, the Indian textile sector continues to face serious issues involving transaction cost and raw material. The government should, therefore, focus on infrastructure facility related to the supply chain and provide low cost logistics service to the sector. The sector also requires higher technology up gradation and active involvement of new technology. 

Assocham has asked the government to increase allocation under the Technology Up gradation Fund Scheme (TUFS) for textile firms from 3,140 crore to Rs 4,500 crore to help the sector come back on growth trajectory.  The government had given Rs 2,632 crore under TUFS in 2008-09 and has earmarked Rs 2,606.62 crore for this fiscal.

Textile exports in 2008-09 registered a decline of 1.71% from $22.13 billion in the previous fiscal to $21.75 billion.  The sector witnessed an increase of 50% in investment during 2008-09 to Rs 49,613 crore from Rs 31,161 crore in 2007-08.  Assocham further said that the government should create an investment friendly environment by providing low interest loans to investors.