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'New stimulus package totally disappointing' - Mr Dalmia, CITI
Jan '09
Mr Dalmia, Chairman, CITI
Mr Dalmia, Chairman, CITI
The second stimulus package announced by government on 2nd January 2009 has been totally disappointing as far as textile and clothing industry is concerned. In a statement issued here, Shri R.K. Dalmia, Chairman of the Confederation of Indian Textile Industry pointed out that the global economic crisis has eroded demand for textile products and all major textile exporting countries have been affected seriously by this market erosion. Other major textile producing countries like China and Pakistan have taken significant remedial measures to address this problem.

Shri Dalmia stated that in addition to international developments, India's textile industry has also been affected by negative government decisions such as reduction of drawback rates withdrawal of interest subvention on export credit, inordinate delay in disbursement of TUFS claims and totally unreasonable increase in Minimum Support Prices for cotton.

Given the vital role that the textile and clothing industry plays in the social and economic development of the country in terms of clothing the masses, providing employment to the uneducated and women and contribution to GDP, inclusive economic growth can be ensured only if the serious concerns of the textile and clothing industry are properly addressed.

Shri R.K. Dalmia pointed out that the textile sector directly employ close to 35 million workers and more than one million jobs are at risk because of export deceleration and declining production as well as profitability. IIP data and exports data released by Government give ample evidence of the serious situation that this industry faces, he added.

Shri Dalmia stated that refusal of a moratorium on repayment of term loans is bound to lead to extensive loan defaults resulting in a large number of NPAs which would have serious impact on the textile industry and also on the banking sector. Stating that cosmetic changes made in DEPB and drawback rates on some products will have no tangible impact, Shri Dalmia said that the minimum that should have been done was to restore drawback levels to the levels that prevailed before the reduction effected in September 2008.

4% interest subvention allowed in export credit was withdrawn from October 2008 out of which 2% was reinstated in the first stimulus package. There was expectation in the industry that the remaining 2% would also be restored. This hope has also been belied.

The textile industry is in no position to invest in modernisation, let alone any expansion. Thus, increased credit availability is not going to help this industry unless it is first helped to stand on its feet. At the present interest rates, even working capital loans are unaffordable for this industry.

The textile and clothing industry is already in a serious crisis and the coming months will see substantial closure of units and loss of lakhs of jobs. Shri Dalmia stated that it is not too late even now for Government to wake up and to rescue this industry not only for the sake of the industry itself but also for the sake of the society and the economy of the country in general.

Confederation of Indian Textile Industry

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