Mills urge Centre to expedite debt restructuring package

The Southern India Mills' Association (SIMA) has asked the Centre to expedite implementation of the debt restructuring package to help make them eligible for the TUF (Technology Upgradation Fund) subsidy and sustain the viability of these unit. They have sought the Cabinet to pass the necessary resolution to enable the NPA units to be covered under the package.

S Dinakaran, chairman, Sima, said the Indian textile industry started revival from the beginning of the year and more so in the recent past due to the increase in demand for cotton fabrics and made-ups textiles in domestic and international markets.

It may be noted, the industry faced the worst-ever crisis in 2010-11 due to the high volatility in the cotton prices, acute power shortage and glut in domestic and international markets.

On May 29, the government announced a debt restructuring package of Rs 35,000 crore to reduce the stress and revive the industry from the crisis. But the banks still await the directions from the government for implementing the package, said Dinakaran.

He further stated that the demand for the fabrics and made-ups had increased enabling the textile industry across the value chain to stabilise its performance. “Majority of the textile units in the country have started breaking even after a long time, in spite of the abnormal increase in the costs of power, transport, labour and also cotton.”

The price of Shankar-6, the predominant cotton variety, has risen from Rs 91 per kg during June 2012 to Rs 107 per kg by the end of August 2012. During the same period, the Hank Yarn price for 40s rose from Rs 222 to Rs 226 per kg; warp yarn of Rs 205 to Rs 215 per kg and in the case of 40s Hosiery it increased from Rs 221 to Rs 228 per kg, he noted.

Yarn prices were stable for the last three months in spite of a substantial increase in the cost of production and the industry has been able to break even due to the improved capacity utilisation and demand.

The made-up textile exports to the US rose 18 per cent during the first six months of 2012 compared with the exports during the same period last year. He also said the festival season demand had improved the domestic fabric requirements substantially.

Against this scenario, SIMA chief has asked the Ministry of Textiles and the Ministry of Finance to implement the debt restructuring package, including passing a necessary resolution by the Cabinet enabling the NPA units covered under the debt restructuring package to become eligible for the TUF subsidy to sustain the viability of such events.

He also stated that the Indian cotton textile industry would continue performing better by taking advantage of cutback in cotton textiles production by the countries like China.