TUFs subsidy helps textile mills to ease out working capital substantially, SIMA

07 Aug '09

4 min read

The Indian Textile Industry has been passing through an unprecedented crisis during the last two years due to global economic melt down, steep increase in raw material cost, acute power shortage in States like Tamil Nadu, hardening of bank interest rate etc.

The textile mills which had undergone substantial modernization, expansion and green field projects under TUF Scheme were the worst affected due to the undue delay in reimbursement of TUFS arrears over two years. These textile mills had completely eroded their working capital and starving for funds. SIMA had made a representation to the Hon'ble Union Minister of Textiles, Thiru Dayanidhi Maran at the interaction meeting organized by the Association on 16th June 2009 at Coimbatore wherein Hon'ble Minister had promised to address the issue in the Budget.

Accordingly, Rs.3,140 crores was allocated in the Budget to clear the arrears. The Association also had suggested formulating a National Fibre Policy to have a long-term solution for the raw material. Now, the Hon'ble Minister has addressed both the issues.

Shri J.Thulasidharan, Deputy Chairman, The Southern India Mills' Association (SIMA), has thanked Hon'ble Union Minister of Textiles, Thiru Dayanidhi Maran for addressing the long pending issue in a single stroke. He has highly appreciated the maiden efforts put in by the Hon'ble Minister to credit the individual beneficiaries bank accounts within 72 hours. This will greatly help the textile mills which have been seriously suffering for want of funds and ease out the working capital substantially.

The banks used to take considerable time and delay in refunding the interest subsidy and putting hardship to the textile mills. Shri Thulasidharan has said that the announcement would give enough confidence to the entire textile industry to make further investments.

SIMA Deputy Chief has also thanked the Hon'ble Minister for formulating a 41 Member Committee to draft the National Fibre Policy under the Chairmanship of Textiles Secretary. The Indian textile industry does not have a healthy competition in the global market due to inconsistent policy and high incidence of duties on textile fibres.

Since raw material accounts for 50 to 60% of the cost of production a sound Policy is very essential to sustain the competitiveness of the Indian textile industry which works on a wafer thin margin but providing the second largest employment in the country, next only to agriculture, particularly for the people below the poverty line and rural womenfolk.

The ratio of cotton and synthetic fibre consumption in India is 60 : 40 as against the reverse across the globe. Since synthetic material clothe predominantly poor section of the people, it is very essential to draft a suitable policy to make synthetic and its blended textile products available at an affordable price to the people below the poverty line. Proper policy is also required for cotton to enable the Indian textile industry to compete with the countries like China and Pakistan. Therefore, SIMA has been pleading the Centre to announce a National Fibre Policy.

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