'Half hearted approach by Govt' - Mr Sunil Jain, NITMA
12 Dec '08
6 min read
Besides, the Government should provide working capital at 7% interest rate as is applicable to the farm products and also extend the validity of working capital loans from four months to nine months. This will help the mills to store the raw cotton for long period and in return this will help the farmer to sell their produce faster and at a better price.
The textile industry is the largest employer in the industrial sector which NITMA have been continuously pinpointing to the Government at all times and that unemployment in this sector will be a huge loss for the country but the same was not heard because these unemployed workers from the mills were easily getting jobs in the construction sector and therefore the Government did not realize the need to do something for unemployment in textile sector. Now when the Real Estate sector is in a problem, unemployment has come to the limelight in a bigger way, Shri Jain added.
Shri Jain further requested the Government not to subsidize the cotton export in any way. This will further kill the industry for all times to come. Instead Government should take positive measures so that the industry should be able to use more raw cotton and its consumption and add value to our precious raw material which will result in creation of wealth, creation of employment and earning valuable foreign exchange for the country.
Shri Jain stated that there are reports in the newspapers that Government is contemplating to grant a total of 8% export incentives for raw cotton. This would make our cotton substantially cheaper for our major competitors and therefore our cotton textiles would be completely outpriced in the international markets on the strength of our own cotton. Already, our textile exports are stagnant in some markets and are gradually declining in other markets. Any further hit on the raw material front is something that the industry will not be able to handle.
Shri Jain pointed out that export incentives for cotton will not be available to farmers since only trader's export cotton. Earlier, there was a 1% drawback benefit available on export of cotton until a few months back and this was removed by Government only for ensuring that the advantage of Indian cotton should go to the textile and clothing industry of India rather than those of our competing countries.
Shri Jain appealed to the Government that no export incentives may be granted for export of raw cotton from India since these will not be of any help to the farming community and will have adverse impact on the textile and clothing industry.
Most units of the textile industry were restructured to facilitate new investments prior to phasing out of quota regime in end of 2005, mainly in 2004. This would mean that most companies would be repaying the restructured loans even in the year 2009-10.
Shri Jain requested Government's intervention in this important issue to provide asector specific relaxation to the NPA norms of RBI permitting a two years moratorium for the textiles and clothing sector for repayment of principal amounts of term loans, without considering the loan as NPAs, as a special case.
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