THE coming Budget could give support to the capital goods industry with a view to stimulating investments in the economy. Particularly needed is an incentive package for the domestic textile engineering industry, considering that government’s own estimate says the textile sector would place fresh demands for machinery worth Rs 1 lakh crore in the next five years. (Whether this estimate holds true even after the decline in textile exports due to the rupee’s rise is another question). Anyway, the government has an obligation to salvage the textile industry from its current morbidity and spur its growth, given that it is highly employment-intensive and potentially, a smashing forex earner). Currently, the Indian textile machinery industry is a pigmy, compared to the textile industry. In 2006-07, its turnover was just Rs 3,000 crore. There is not a single unit in India that manufactures modern weaving machines (shuttle-less looms) and large processing facilities. European machinery giants like Sulzer, Picanol, Saurer and Truetzchler are anxious to shift production to the Indian subcontinent to cater not only to the huge Indian market but also to Pakistan, Bangladesh, Indonesia etc. If they set up production base in India, they would be able to sell at 60% of their current prices to Indian consumers. This, in turn, would be a huge cost advantage to Indian textile and garment industry. What can the Budget do? A technology upgradation fund would be an additional incentive for the FDI waiting at the doorsteps. Setting up of sectorspecific parks in locations near the existing machinery manufacturing activity is another policy option.