Indian govt working on restructuring loans to textile sector

31 Oct '11

1 min read

The Government of India is working on a proposal to restructure loans given to the textile sector, which are to the extent of Rs. 40-50 billion. The proposal does not include debt waiver.

The textiles sector is currently facing a slowdown and according to the Ministry of Textiles, the demand for cotton fabric has declined by around 19 percent year-on-year, while a dip of 15 percent has been observed in demand for cotton yarn, and a fall of 5 percent has been noted in demand for blended yarn.

To enable the sector ride through the slowdown, the Ministry of Textiles has proposed a four-pronged strategy. It includes resetting the interest rate on the debt and converting working capital into fresh debt, which will cost Rs. 8.35 billion.

On the suggestion of companies, the Ministry is also considering a two-year freeze on repayment of restructured debt as well as a 4.5 percent interest subsidy on packaging credit.

The issue of loan restructuring has already been discussed with the Ministry of Finance and a detailed proposal is expected to be submitted by the Ministry of Textiles in the coming days.

Fibre2fashion News Desk - India

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