The government is expected to raise allocation to two key support schemes for the textile industry, the Technology Upgradation Fund Scheme (TUFS) and Scheme for Integrated Textiles Parks (SITP), in the coming Budget.

The move is aimed at helping textile companies to go ahead with their expansion plans, which were put on hold due to rupee appreciation.

The rupee has appreciated by over 12 per cent in the last one year. But since January, it has firmed at around Rs 39.66 against the US dollar, and is expected to strengthen in the 2008-09 fiscal.

In the coming Budget, the finance ministry is expected to allocate Rs 1,700 crore (Rs 17 billion) for TUFS and Rs 450 crore (Rs 4.5 billion) for SITP, which would be 86 per cent and 6 per cent higher than what was allocated in 2007-08.

However, the gross budgetary support (GBS) for the textiles ministry is likely to go up by a meagre 2 per cent over the total support of Rs 2,243 crore (Rs 22.43 billion) in 2007-08. While the ministry is learnt to have demanded Rs 3,367 crore (Rs 33.67 billion) for 2008-09, it might get around Rs 2,270 crore (Rs 22.7 billion) due to financial constraints.

Industry expert say that continuation of TUFS till March 2012 will help the industry to continue its expansion and modernisation plan and incentives, such as subvention on interest paid on pre- and post-shipment credit, and revision in drawback rates and Duty Entitlement Pass Book rates that will further help the sector.

"However, the scale of capex in 2008 could be lower on account of high financial leverage," he said.

"Delay in TUFS disbursement has been a serious problem for the last one year and there is a huge backlog now. So, it is important that sufficient funds are allocated in order to avoid such delays," said D K Nair, Secretary General, Confederation of Indian Textile Industry.