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Indian textiles sector supports capital raising plans ahead of expiration of tuf by fsfshjk qwrfghjk
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Indian textiles sector supports capital raising plans ahead of expiration of tuf |
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Business,Business News,Business Opportunities
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Textiles sector is giving support to their capital raising plans ahead of expiration of government sponsored Technology Upgradation Fund (TUF) in March 2007; Fasiha Shaikh, textile analyst, Angel Broking, said here on February 25.
Six textile companies have mobilised over Rs 400 crore by tapping the market in 2007 till date and some more initial public offerings (IPOs) from the sector are in the offing.
The textiles firm receives the required finance at the subsidised interest rate of 5% from the special fund created by the government under the TUF.
Manufacturing is the key driver to growth that will propel Indian economy on a higher growth trajectory. Over the last decade, India’s manufacturing landscape has changed dramatically.
The manufacturing sector witnessed a robust growth of 11.3 per cent in 2006 as compared to 9.1 per cent the year before.
To sustain a 10 per cent growth, the government must continue to accord the highest priority to manufacturing.
This is essential, as manufacturing has emerged as the key to meeting the ambitious 9 per cent growth target in the 11th Five-Year Plan.
Achieving global competitiveness in manufacturing is vital as this sector offers the highest employment potential.
This would bring about dis-intermediation in the SME sector which is currently tapping resources from the banks and other financial institutions.
Revitalising OTCEI will provide SMEs much needed access to the stock market to raise capital. Growth is a function of investment, and investment is facilitated by flexible, timely and progressive policy responses in a dynamic and competitive global economy.
Despite the advances made in the recent past, there are numerous constraints to growth in manufacturing. India has its work cut out as it makes transition from being an attractive labour pool to a global manufacturing power; it said.
Foremost among these are a paucity of natural resources and highly skilled manpower, poor infrastructure and inefficient regulatory mechanism.
High interest rates and taxes are other problems plaguing this sector, the body said.
There is a critical need to lower taxes and bring in tighter fiscal and monetary policy. India must address these challenges to emerge as manufacturing leader, the IACC noted.
Manufacturing contributes 17 per cent to the GDP. However, with right policy support its share can go up to 22 per cent, the chamber noted.
Some of the companies which have already approached the capital market in recent times are House of Pearl Fashions, Hanung Toys, Technocraft Industries, Mudra Lifestyle, Indus Fila, Abhishek Mills, Evinix Accessories and Vijayeshwari Textiles. All these companies had stated in their issue prospectus that the proceeds raised through the issue of equity will be used for new capacity expansion as well for the integration plans.
The removal of textile quota restrictions imposed by the European Union (EU) and the US as per the WTO agreement has seen an increase in the export sales of domestic textile firms.
With the availability of incentives for export promotions in domestic market and huge opportunities for growth lying ahead in the export market, many small- and mid-sized textile companies are rushing to the primary market to raise funds to finance their expansion facilities.
Fasiha Shaikh said that the removal of quota restrictions and the domestic retail boom has definitely contributed to the growth of the domestic textile firms in a great way. This in turn has resulted in companies tapping the capital market for raising funds for capacity expansion.
The other major factor which is seeing a spurt in the textile firms coming up with their IPOs is that the subsidy enjoyed under the TUFS is expiring in March 2007 and these firms want to take advantage of the present opportunities before the deadline expires.
Experts feel the government may extend TUFS for another one or two years to boost textile exports before the Chinese textile firms come out of quota restriction. I am an expert from China B2B Market, usually analyzes all kind of industries situation, such as installing a pocket door , stainless steel drawer slides.
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