The government is expected to increase incentives for the labour-intensive textiles industry in the forthcoming Budget to boost sector's exports and manufacturing.
As a part of support to the textiles sector, the government may enhance allocation for the Technology Upgradation Fund Scheme (TUFS) in the Budget, sources said.
TUFS, launched in 1999, facilitates modernisation and upgradation of textiles industry by providing credit at reduced rates to entrepreneurs both in the organised and the unorganised sector.
The government had approved the continuation of TUFS for the 12th Plan period (2012-17) with a budgetary allocation of Rs 11,900 crore.
Sources said that the government is also expected to streamline the procedure for timely disbursement of the fund.
In its pre-Budget consultation with the Finance Minister Arun Jaitley, industry has asked for increasing the fund allocation under the scheme to ensure that it operates without any problems during the entire 12th Five Year Plan period.
"We would also request that annual allocation for the scheme may be kept at the maximum possible level in order to ensure prompt disbursement of TUFS assistance to the industry," Confederation of Indian Textile Industry (CITI) has said.
CITI has also asked for reduction in excise duty from 12 per cent to 8 per cent to encourage production and consumption of man-made fibres in large quantities.
The sector accounts for about 14 per cent of total industrial production, 12 per cent of exports and 4 per cent of GDP of the country.
The size of the industry is over USD 90 billion at present including nearly USD 40 billion in exports. It employs about 45 million workers.
The textiles industry requires constant modernisation of plants and machinery to remain competitive in global markets against rivals like China, Bangladesh and Sri Lanka.
Finance Minister Arun Jaitley is expected to present Budget for 2014-15 in the second week of July.