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Saturday, February 24, 2024

Indian textile mill bodies seek financial relief to tide over slow exports

Several Indian textile mill bodies highlighted the spinning sector’s heightened financial stress to the Indian Finance Minister through a letter.

They appealed jointly to Finance Minister Nirmala Sitharaman due to a massive slowdown in the cotton-based spinning sector, aggravated by the Ukraine-Russia conflict and the recent Israel-Hamas war.

“The textile industry had received critical support under the Emergency Credit Line Guarantee Scheme (ECLGS) of Rs 16,920 crores,” the letter said.

“This constitutes about 6 percent of the overall disbursement of Rs 2.82 lakh crores till September 30, 2022,” the appeal stated.

“But now, the spinning sector is facing a harsh crisis with a 50 percent drop in cotton yarn exports, a 23 percent fall in overall cotton textile exports, and an 18 percent decline in total textiles and garment products.” the letter added.

The prolonged economic impact of global conflicts, combined with challenges like the 11 percent import duty on cotton and issues related to MMF Quality Control Orders, has led to a massive decrease in capacity utilization, which ranges from 50-70 percent since nearly 12 months.

This dismal situation has pushed many SME spinning mills into severe financial stress, making them unable to service debts. As a result, most are deeply in debt.

The textile mill associations appealed to the finance minister to suggest the banking industry give exceptional support to the spinning industry and extend support measures.

They demanded extending the one-year moratorium to repay the principal amount and converting three-year loans under ECLGS into six-year term loans.

The bodies also requested the banks to extend financial assistance on a case-on-case basis to lessen the stress on working capital.

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