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Indian Textile Ministry submits plan for loan recast

28
Feb '12
The Ministry of Textiles, Government of India, has submitted its proposal to the Ministry of Finance for restructuring of loans amounting to Rs. 1 trillion, extended mostly by public sector banks to the textile sector.

Speaking on the sidelines of an event organized by Apparel Export Promotion Council (AEPC) in New Delhi, Textiles Secretary Krian Dhingra said that the Ministry is in talks with the Ministry of Finance to recast loans extended to the textile sector. She added that the Finance Ministry is probing further into the figures.

Indian textile industry has been urging for relief from the Government as high interest rates have affected the silk, spinning and powerloom units.

In fact, the textile sector started facing problems from October, 2010 onwards when there was a sudden surge in prices of cotton and cotton yarn. Subsequently, there was a substantial decline in yarn prices from April 2011 onwards owing to poor demand due to debt crisis in the Eurozone and a slowdown in the US economy, which together account for nearly 65 percent of the country's textile exports. These events led to a huge credit crisis in the textile industry.

The Textiles Ministry's submission of proposal gains significance in view of the forthcoming Union Budget, which is scheduled to be presented on March 16, 2012.

Last month, the Textiles Ministry had consultations with the Reserve Bank of India (RBI) for restructuring textile sector loans. However, the central bank had turned down the proposal saying such a step would not be in accordance with “the best international practice”.

At the event, AEPC launched a Ministry of Textiles-sponsored initiative 'Disha', which is aimed at encouraging garment manufacturing units to adopt better social practices and to make their products internationally competitive.

The initiative was planned after some western countries like the US raised concerns regarding employment of child labour by some garment making units in India.

Under the 'Disha' programme, apparel exporters will be educated on a 'code of ethics', covering all significant environmental and social concerns such as health, industrial safety and child labour.

The Textiles Secretary requested the 'Disha' management to initially create awareness on issues like child labour and wages to owners of small garment manufacturing units.


Fibre2fashion News Desk - India


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