Dip in exports has created a glut in the domestic market, which has already affected the domestic suppliers in terms of their profits and accumulation of inventories.
Textile and clothing industry has very strong backward and forward linkages. One important linkage is the cotton farmers, who have switched over to the crop in anticipation of higher demand and better prices.
Their hopes are dashed in view of the fast enveloping glut in the industry. Also, textile equipment manufacturing industry, which has recorded solid growth in the previous years, is concerned about the sluggish demand.
The entire supply chain, -movement of traffic from manufacturing hubs to export loading centers, such as ports and airports, which gainfully helped in detailing a huge fleet of carriages, wagons, ships etc -would face slow down in their demand.
Calling for urgent help from the Government to tide down the situation, textile industry leaders said that a string of policy interventions are required to address the problems.
There should be proactive approach on the part of the Government, SEBI and RBI to calibrate the in flow of foreign exchange, which makes rupee stronger day by day.
Also, a more proactive policy towards investing a part of the huge accumulation of foreign exchange reserves abroad should also be thought of.
On the domestic policy side, the industry urges that the Levies at the State Governments and municipality levels amounting to 6 per cent should be refunded to textile and clothing exporters. Alternatively, Duty Free Scrips may be introduced at suitable rates to compensate for the State levies.
Pre-shipment and post shipment credit may be made available for the textile industry at 6 per cent. Post shipment credit may be extended from the present three months to a period of one year.
Service Tax applicable to all export related activities should be withdrawn immediately. A moratorium of one year may be allowed on existing loans in respect of the principal amounts so that the possibility of these loans turning into NPAs can be averted.
It is also necessary to ensure that all dues from Government are paid to textile exporters without any delay. In cases, where delays do occur interest should be paid to the exporters so that their working capital erosion gets mitigated.
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
