Govt must pay heed to highest employment sector - NITMA

29 Nov '08

6 min read

Outstanding TUF's subsidies since September 2007 amounting to Rs20,000 million should be immediately disbursed to the industry or instead soft loans at reduced interest rates be given to tide over the liquidity crisis in the industry.

Excise duty should be removed on HFO and diesel as has been done by the Government on aviation fuel. More than 3000 MW is lying idle because of high fuel cost. To neutralize this loss the Government can impose excise duty on the finished product of textile at different stages.

Gas should be allotted to the textile units to generate power, as this is the most eligible sector because they are using 100 percent farm products, earning maximum foreign exchange and employment. It is suggested that under APM scheme the gas should also be given to the textile industry so that industry should use this gas to produce power for in house consumption and selling it in the domestic market at the rate of 2$ per mmbtu( Rs6-7 per cbm.)

The margin money charged by banks for funding cotton purchases by mills may be reduced from the current 25 to 10 percent. Besides, the Government should provide working capital at 7 percent interest rate as is applicable to the farm products and also extend the validity of working capital loans from four months to nine months. This will help the mills to store the raw cotton for long period and in return this will help the farmer to sell their produce faster and at a better price.

Government is now keeping a check various products but unfortunately the maximum employer of country and the maximum foreign exchange earner is totally forgotten. Even so when the Prime Minister called the Industrialist the entire sector was not invited at all. This is high time that the Government must wake up and do something positive for the textile sector.

Government should not subsidize the cotton export in any way. This will further kill the industry for all times to come. Instead it should take positive measures so that the industry should be able to use more raw cotton and its consumption which is expected to be 26.5 million bales and should increase as much as possible by adding value to our precious raw material which will result in creation of wealth, creation of employment and earning valuable foreign exchange for the country.

Most units of the textile industry were restructured to facilitate new investments prior to phasing out of quota regime in end of 2005, mainly in 2004. This would mean that most companies would be repaying the restructured loans even in the year 2009-10. Government's intervention in this important issue is required to provide a sector specific relaxation to the NPA norms of RBI permitting a two years moratorium for the textiles and clothing sector for repayment of principal amounts of term loans, without considering the loan as NPAs, as a special case.

Since the Government has sidelined the EOU Scheme for the last two-three years, textile EOUs who wish to debond from the Scheme and convert into EPCG Scheme should be allowed debonding with immediate effect without paying any duty on their capital goods.

Discussing the future of the textile industry, the NITMA President stressed, “The Vision for Indian Textile and Clothing Industry Report prepared by CRISIL has projected a total investment of 1940 billion in this sector during the period 2007-2012 to achieve the Vision target and create additional employment for 14 million people by FY 2012 and achieve an export of textile products to the tune of US $50 billion by 2012.”

Fibre2fashion News Desk - India

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