High-level govt meeting to sort out textile firms' debt issues

The textile ministry will meet the finance ministry to restructure loans for the textile industry. A joint meeting of textile and finance ministry officials, and those from the Planning Commission, the Reserve Bank of India (RBI) and various other banks will take place on February 2 in New Delhi.

Following several appeals from the industry, the textile ministry has been requesting the finance ministry for two months to intervene and help restructure textile companies’ loans, as they have been suffering heavy losses for some time now.

The industry has been under pressure for over a year due to volatility in cotton prices and uncertainties in major export destinations. It was also hit after the government allowed duty-free import of 48 textile items from Bangladesh.

So far, RBI has said nothing about restructuring textile loans.

Currently, orders are coming in, but the sector has not been able to accept these as they have problems in managing even their working capital.

“Most of the money is used to repay loans and cover losses,” said D K Nair, secretary-general of the Confederation of Indian Textile Industry (Citi). “I expect the next financial year to be better for the industry, as orders have already started to trickle in and will pick up eventually.”

In a presentation made by Citi to the ministries and planning commission, it said the textile industry debt was Rs 1,00,000 crore, although no payment default had been seen so far. The Indian spinning industry was in losses worth Rs 11,000 crore last year.

The other issue likely to be discussed in the ministerial meeting is implementation of the new Technology Upgra-dation Fund Scheme (Tufs), said an industry source.

Tufs was re-introduced last April for the current financial year, with an addition of Rs 1,972 crore. The response this year has been poor due to the economic crisis in major economies, thus having an effect on the orders coming in. Many textile companies did not opt for this scheme.