The Budget allocation for the labour-intensive textiles sector — which provides jobs to about 45 million people — increased 14.7 per cent over the previous year to ?7,148 crore.

The rate of growth in allocation for the new fiscal, however, is less than half the increased allocation of over 30 per cent to Ruppee6,226.5 crore in 2017-18.

The textile sector, which is facing double trouble in the form of lower exports, especially of garments, and higher imports from countries such as Bangladesh, had sought higher rates of reimbursement under the duty drawback and refund of State levies (ROSL) following the implementation of the new GST regime.

It also demanded higher disbursement under the Amended Technology Upgradation Fund Scheme (ATUFS).

"Adequate budgetary allocation for schemes such as refund of State levies and interest subvention benefits can help improve competitiveness of textile exporters and boost export growth," industry analyst ICRA had said in a pre-Budget note.

While allocation for the ATUFS has been raised to ?2,300 crore in 2018-19 from ?1,956 crore in 2017-18, it is still lower than the allocation of ?2,622 crore in 2016-17.

Provision for ROSL for 2018-19 is higher at ?2,222 crore compared to ?1,939 crore last year, but the ROSL rates remain unchanged.

"The industry was hoping for some support to mitigate the financial crunch, especially because it faced a severe reduction in the drawback and RoSL benefits. The industry is looking forward to increased interest subvention from the existing 3 per cent to 6 per cent, to help stay competitive, as several other countries have much lower interest rates," pointed out HKL Magu from the Apparel Export Promotion Council.

As per industry calculations, under the new GST and drawback rules, reimbursements of taxes for the sector has dropped to the extent of 7 per cent (of the value of exports), whereas an additional incentive of 2 per cent was given to the sector in the foreign trade policy review in December. This resulted in a shortfall of 5 per cent, leading to a fall in exports, according to AEPC.

Exports down

Export of garments and textiles fell 3 per cent in December 2017 to $2.99 billion, although in the April-December 2017 period it grew 2 per cent at $26.13 billion.

According to figures compiled by textile body CITI, India’s imports of garments from Bangladesh increased 66 per cent to $111.3 million during July-December 2017 compared to $66.9 million in the same period last year.