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Friday, February 23, 2024

Indian textile mills seek government support to tackle severe financial crisis

The year 2023 was the worst year for the spinning industry the world over. Textile mills in Pakistan and Bangladesh have since long been asking their government to bail them out. Now the IndianTextile mill associations have joined them

They have submitted a joint memorandum to Union Finance Minister Nirmala Sitharaman seeking financial support. The concessions they demand include extension of one-year moratorium for repayment of the principal amount; conversion of three-year loans under the Emergency Credit Line Guarantee Scheme (ECLGS) into six-year term loans, and extension of necessary financial assistance to mitigate the stress on working capital, on a case-to-case basis.

Textile industry pointed out that the spinning crisis looms large as demand hits a low. The association in a press release pointed out that under the ECLGS, ₹16,920 crores were disbursed to the textile industry as of September 30, 2022. The spinning segment faces a crisis with a 50 percent decline in cotton yarn exports, a 23 percent drop in overall export of cotton textiles, and an 18 percent reduction in total textiles and clothing products in 2022-2023 compared with the previous year. Capacity utilisation in the mills ranges from 30 to 50 percent. The association stated that the situation is dire for the entire spinning sector but it particularly pushed the SMEs into severe financial stress.

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