The Indian textile industry has received a major relief as the government advised banks to restructure loans extended to the textile industry amounting to Rs 350 billion.
This long pending demand from industry bodies came after a meeting between Finance Minister – Mr Pranab Mukherjee and Commerce cum Textile Minister – Mr Anand Mohan Sharma.
Overall the banks have an exposure of around Rs 1,560 billion to the Indian textile sector. This means that a little less than 20 percent of the outstanding loans will be restructured.
The package envisages a two-year moratorium on interest payments and conversion of eroded working capital into long-term loans with tenure of between 3 to 5 years. This move would also help these loans to be classified as non-performing assets.
Nearly 70 percent of Rs 350 billion is expected to benefit nearly 2,000 cotton textile mills, more so those located in Tamil Nadu, a hub of cotton textiles.
The textile industry is the second biggest employer after the agriculture sector in India and this announcement will come as a breather for the sector reeling under the impact of volatility in raw material prices and slowdown in export markets.
Industry bodies like Confederation of Indian Textile Industry (CITI) and Tirupur Exporters' Association (TEA) have welcomed the move.
Fibre2fashion News Desk - India