The industrial sector of the country, as well as the textile industry is again looking up for a supportive Budget for the year 2006-07. As the pre-budget memorandum from the concerned bodies have already reached the Finance Ministry with recommendations and expectations from the industry, the ministry is scrutinizing what best can be offered keeping in mind each segments' interest. Growing Indian textile sector also has high hopes from an industry friendly budget for the up-coming year, since the Indian textile sector is highly fragmented, each of its sectors has diverse expectations from the government and their demands sometimes contradict each other. However, keeping in mind the bigger picture of future Indian textile industry, policy makers have to come up with plans that would support the path the industry needs to travel, as well as to meet the statutory and legal framework arising out of India's commitment to WTO. Some of the specific issues that have been raised by the textile industry must be given serious thought while making budgetary and policy measures.
One of the issue is the demand for developing a viable scheme to refund indirect taxes levied by the State Governments, Municipalities and other local authorities, which contributes to a cumulative burden of around 10% according to current estimates. Also, higher transaction costs, which according to a report by the Task Force on Transaction Costs, headed by the DGFT, states that it accounts for approximately 10% of FOB value. This sort of difficulty creates adverse affect on the growth of the industry and must be considered while drafting policies. Since, large scale production capacity is what India needs
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| to cater the growing demand for textiles and clothing, also for growing up in the product value chain for value added products industry needs sophisticated textile machinery as well as quality control equipment. Industry's' demand for lowering custom duty and excise duty across all textile machinery should be considered seriously. Further, each segment of the industry must be offered a level playing field according to their competency while framing taxation policy.
Another most decisive factor for better industrial health is labor law. In spite of demand from entire industrial sector, so far the reforms have not taken place for whatever the reason. However, by delaying reforms in such matter - though being a politically sensitive issue - would not help the industry. Further, emphasis on infrastructure development and rapid implementation must get priority for faster industrial growth and creating mass employment. In addition, it would make our industry internationally competitive as well as create conducive business atmosphere.
In spite of positive measures and investment friendly schemes, India's investment in the textile industry is lower than the desired level to achieve the Govt.'s target of US$ 50 billion by 2010. Also, foreign direct investment in the sector is almost negligible. Hence, there is a need for developing fresh strategy to attract foreign investors. Finally, Govt. must develop an efficient trade intelligence delivery system, not only for textiles but also for all other industrial sectors for better business decision making as well as developing policy and strategy based on authentic information. These are few of whole lot of issues which need immediate attention and to be addressed well by the Government for the coming year. 
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