‘Spinning sector needs export interest subvention’

May 18, 2015 - India

Credit rating agency Crisil has suggested the need for export interest subvention for spinning textile sector, according to media reports.

As per the interim report, prepared based on the request of Texpreneurs Forum, a copy of which was presented to the Commerce Minister, Nirmala Sitharaman last week, rising NPA levels in textile, falling EBITDA and net margin (majority of the mills in net loss) and fall in credit rating showed the reality.

"If the same trend continues, in next stage, fall of spinning sector will lead to a major crisis to farming community, because every year cotton output is increasing in our country," the report said.

Though in general, government was of the opinion that spinning was well organised and well grown and self-sustainable, because of 2011-12 historic losses due to cotton volatility and subsequent development in China in the last two years and also new capacity addition in spinning sector, created big trouble in finances of 'stand alone spinning mills,' it said.

Stating that cotton as commodity only has limited export potential, because only 10 countries will import cotton, the report said in case of yarn, export potential was more as it can be exported to more than 60 countries, indicating that cotton farming also directly linked with the health of spinning industry. (SH)