Indian Textile Bodies Seek Financial Support for Industry From Govt
Various textile mill associations of India have highlighted the acute financial stress faced by the spinning segment of the textile industry to the Finance Minister.
The joint appeal to Minister of Finance, Nirmala Sitharaman comes after a significant downturn in the cotton-based spinning sector, exacerbated by Ukraine-Russia conflict and the recent Israel-Hamas war.
“The textile industry, a vital contributor to India’s economy, had received critical support under the Emergency Credit Line Guarantee Scheme (ECLGS) to the tune of Rs 16,920 crores,” the appeal read.
“This constitutes around 6 percent of the total disbursement of Rs 2.82 lakh crores as of September 30, 2022,” the letter added.
“However, the spinning segment now faces a severe crisis with a 50 percent fall in cotton yarn exports, 23 percent drop in cotton textile exports, and an 18 percent reduction in total textiles and clothing products.” the letter stated.
The letter further said that the prolonged economic impact of global conflicts, coupled with challenges such as an 11 percent import duty on cotton and issues related to MMF Quality Control Orders, has led to a significant drop in capacity utilisation, ranging from 50-70 percent for almost a year.
“This dire situation has pushed many spinning mills, particularly SMEs, into severe financial stress, rendering them unable to service debts and meet standing charges. As a result, many units have become SMA-1, SMA-2, and NPA accounts,” the letter informed.
The associations appealed to the minister to advise the banking sector to consider the spinning segment as a special case and extend a few support measures.
They include, extending the one-year moratorium for repayment of the principal amount and convert three-year loans under ECLGS into six-year term loans.
They also requested to extend necessary financial assistance to mitigate the stress on working capital, on a case-to-case basis
“We fervently appeal to you to consider our above pleas favourably to mitigate the unforeseen crisis plaguing the spinning sector, prevent job losses to several lakh people, sustain the market share, and achieve export targets,” Rakesh Mehra, Chairman of the Confederation of Indian Textile Industry said.
The joint appeal underscores the urgency of addressing the financial challenges faced by the spinning segment to ensure the continued growth and stability of the textile industry, a key pillar of India’s economic strength.
