Interviews
'Govt should help sustain role of T&C sector' - CITI
24 Nov '08
6 min read
The government has also recently provisioned only Rs 3,000 million for the Textile Up-gradation Fund (TUF) against the requirement of Rs 20,000 million to clear the backlog of pending claims.
The industry is expecting the government to come to its rescue and CITI has suggested reinstating the interest subvention of 4 percent on export credit, at least for the initially announced period of up to 31st March 2009; reinstate the duty drawback rates reduced earlier; reimburse 4-6 percent state level duties which are not refunded to exporters by either Central Govt. or State Govts and extend the post shipment validity of export credit to 180 days, in order to accommodate the payment crisis in international markets.
On the issue of electricity CITI expects that the government should encourage captive generation by abolishing customs and excise duties on liquid fuels for T&C industry; reimburse the cost difference between grid power and self generated power and provide gas to T&C units, wherever feasible, at administered price mechanism rates.
On the measures to ease the liquidity problem they have suggested to clear the backlog in TUFS assistance and other government dues and if sufficient funds cannot be provided immediately, ask banks to allow interest free loans against all Govt dues. Allow a moratorium of two years on repayment of term loans taken by textiles and clothing industry and relax NPA norms to accommodate this and extend the period for repayment of TUFS loans from the current 10 years to 12 years.
The rising prices of cotton have become a contentious issue for the industry, so CITI suggests enabling mills to buy cotton by providing them working capital loans at 7 percent interest at par with the rate applicable to agriculture products against a margin of 10 percent and for a period of 9 months and mandate Cotton Corporation of India (CCI) to sell all procured cotton to Indian mills without holding it and creating an artificial shortage in the market.
Along with the above, give consent to CCI to sell cotton to domestic mills at market price through auction or at a price equal to the f.o.b. export price available to it minus the cost of export involved.
CITI has mentioned that the benefits derived from the recommended measures are many. To name a few; a possible loss of 10-12 lakh jobs can be averted or at least substantially reduced; market shares in USA, EU and Japan can be sustained; huge investments made by the T&C industry in capacity building during the last few years can be saved from idling.
The other benefits citied are about a possibility of a large number of term loans turning into NPAs can be averted, which would otherwise cripple the banking sector; the decline in cotton consumption and the resultant farmers' distress can be arrested and the most vital benefit of all is that the important role of the T&C industry in the country's economic and social development can be sustained.
The industry is expecting the government to come to its rescue and CITI has suggested reinstating the interest subvention of 4 percent on export credit, at least for the initially announced period of up to 31st March 2009; reinstate the duty drawback rates reduced earlier; reimburse 4-6 percent state level duties which are not refunded to exporters by either Central Govt. or State Govts and extend the post shipment validity of export credit to 180 days, in order to accommodate the payment crisis in international markets.
On the issue of electricity CITI expects that the government should encourage captive generation by abolishing customs and excise duties on liquid fuels for T&C industry; reimburse the cost difference between grid power and self generated power and provide gas to T&C units, wherever feasible, at administered price mechanism rates.
On the measures to ease the liquidity problem they have suggested to clear the backlog in TUFS assistance and other government dues and if sufficient funds cannot be provided immediately, ask banks to allow interest free loans against all Govt dues. Allow a moratorium of two years on repayment of term loans taken by textiles and clothing industry and relax NPA norms to accommodate this and extend the period for repayment of TUFS loans from the current 10 years to 12 years.
The rising prices of cotton have become a contentious issue for the industry, so CITI suggests enabling mills to buy cotton by providing them working capital loans at 7 percent interest at par with the rate applicable to agriculture products against a margin of 10 percent and for a period of 9 months and mandate Cotton Corporation of India (CCI) to sell all procured cotton to Indian mills without holding it and creating an artificial shortage in the market.
Along with the above, give consent to CCI to sell cotton to domestic mills at market price through auction or at a price equal to the f.o.b. export price available to it minus the cost of export involved.
CITI has mentioned that the benefits derived from the recommended measures are many. To name a few; a possible loss of 10-12 lakh jobs can be averted or at least substantially reduced; market shares in USA, EU and Japan can be sustained; huge investments made by the T&C industry in capacity building during the last few years can be saved from idling.
The other benefits citied are about a possibility of a large number of term loans turning into NPAs can be averted, which would otherwise cripple the banking sector; the decline in cotton consumption and the resultant farmers' distress can be arrested and the most vital benefit of all is that the important role of the T&C industry in the country's economic and social development can be sustained.
Fibre2fashion News Desk - India
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