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'New stimulus package inadequate' - SIMA Chief

Jan '09
The Indian textile industry is passing through an unprecedented crisis due to global melt down, 40% increase in cotton prices, hardening of bank interest rate, steep increase in minimum support price for cotton, drastic reduction in export incentives, acute power shortage in Tamil Nadu, etc.

The industry has been demanding for a comprehensive relief package to revive the textile industry from the recession and sustain its survival. But the textile industry looks at the stimulus packages announced so far by the Central Government as totally inadequate for its revival in the current scenario.

Dr K V Srinivasan, Chairman, The Southern India Mills' Association (SIMA) has stated that both the stimulus packages announced by the Central Government are inadequate and negligible for the textile industry when compared to the relief packages offered to the textile manufacturers in the competing countries like China and Pakistan to manage the global recession.

He said that a marginal relief in the value cap of duty draw back rates for cotton yarn (both grey and dyed) and grey knitted fabrics and extension of DEPB upto December 2009 are the only features for the textile industry in the second stimulus package. Dr Srinivasan has added that even in the upward revision of duty drawback rates, made-ups and dyed knitted fabrics have been ignored, which would discourage value addition in textile exports.

SIMA chief has stated that the industry was hoping certain major reliefs such as two year moratorium period for repayment of loans, a special package for working capital consisting of 7% interest rate for cotton purchase, reduction in margin money for working capital from 25% to 10%, enhancement of credit limit from three months to nine months and 2% increase in the interest subvention for export credit.

Dr K V Srinivasan has mentioned that though RBI guidelines permit second time restructuring facilities, a clear cut guideline is essential for availing two year moratorium for repayment of loans for the textile industry to avoid becoming NPAs. He has further stated that a special package for working capital is also very important for the textile industry to manage the abrupt increase in the minimum support price for cotton so as to enable the Indian textile industry to procure cotton at internationally competitive rates and manage the global competitiveness.

Therefore, SIMA chief has urged the Central Government to have a re-look at the proposals submitted by the textile industry and announce a fresh package to protect the mother industry from sickness and jobs of several millions, particularly people below the poverty line and rural women folk.

The Southern India Mills' Association

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