Industry body Assocham has urged the government to reduce excise duty on textile machinery to 8 per cent from 14 per cent in order to boost the sector.
"If the excise duty is reduced there would be more demand for indigenous textile machinery and the production would increase substantially," it said.
Indigenous textile machinery attracts 24 per cent to 29 per cent taxes, which increases prices of the equipment when supplied to the industry.
The domestic production of textile machinery was at Rs 3,000 crore per annum and majority of the manufacturers were small and medium enterprises, Assocham said.
"As such, the amount of excise duty contribution by the textile engineering industry to the government exchequer would not be more than Rs 200 crore," it said.
The chamber also said customs duty on capital goods should be charged at the rate of 7.5 per cent and it should be less for raw materials, parts, components and accessories.