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SIMA submits proposal of measures to textile minister

16 Jun '09
5 min read

Memorandum submitted to Thiru. Dayanidhi Maran, Hon'ble Minister for Textiles, Government of India during his visit to SIMA on June 16, 2009.

We are extremely thankful to the Hon'ble Minister for sparing his precious time to visit our Association soon after assuming the portfolio of Textiles.

Sir, our Association (SIMA) celebrating its Platinum Jubilee this year, is the single largest employers' organization representing the organized textile industry in the country and plays a lead role in all policy making committees at State and Central level pertaining to the textile industry. Our member mills are scattered in all the four Southern States of the country and also in few States in the upcountry.

Indian textile and clothing industry is the mother industry of our country accounting for 4% of the country's GDP, 14% value addition in the manufacturing sector, fetching US $ 22.4 billion exports (accounts for 12% of the country's foreign exchange earnings). The textile industry is the second largest employment provider in the country (next to agriculture) employing over 90 million people directly and indirectly and plays a critical role in the growth of the economy.

The Indian textile industry, which had many ups and downs in the past, fully geared itself from 2003 due to various proactive measures and innovative schemes implemented by the Ministry of Textiles viz., Technology Mission on Cotton, Technology Upgradation Fund Scheme, Scheme for Integrated Textiles Parks, export incentives, rationalization of fiscal levies particularly the optional route in excise duty for cotton textiles. The textile industry attracted an investment of Rs.1,55,704 crores as on 31st December 2008. The investment has been doubling year after year during 2003 to 2007 and the industry became a sunshine industry.

From the beginning of 2007, the unprecedented global economic melt down coupled with various negative steps initiated by the Government like 40% increase in the Minimum Support Price (MSP) for raw cotton, 5% export incentive for cotton exports, bulk discount offered by CCI, drastic reduction in export incentive, heavy backlog in government dues, hardening of bank interest rates, etc., have paralyzed the performance of the Indian textile industry.

Even the best performing mills in the country have incurred huge cash losses for the last two years. Under these circumstances, the industry needs a comprehensive bail out package to bring the industry back on wheels and achieve the investment target of Rs.1,55,000 crores, 7 to 8% growth and creation of 10 million new jobs as set by the Hon' ble Minister.

We humbly submit the following proposals for the kind consideration of the Hon'ble Minister, as they are immediately needed for the textile industry:-

1) Raw Cotton
• Relax working capital norms specifically for cotton
- 7% interest rate as against PLR at present
- Reduce the margin money from 25% to 10%

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