Textile mills demand lower interest rates

Textile industry’s woes seem to be a never-ending phase. Textile mills have begun making representations to government to bail them out from inflationary trends by cushioning their working capital requirements with low interest rates.

According to the Confederation of Indian Textile Industry (CITI), the global meltdown has led to a drastic fall in demand for fabric and apparels, thereby affecting the mills’ businesses.

On behalf of its members, CITI has been demanding that the government should help mills in building working capital by offering low interest rates.

“With the demand falling sharply in these inflationary times for fabric and apparels, especially in the western market, mills are finding tough to run their businesses.

Due to lack of working capital, the mills are facing a tough time continuing their production inspite of low cotton prices,” said D K Nair, general secretary of CITI.

The Cotton Advisory Board has estimated the cotton production to be around 322 lakh bales for the cotton year 2008-09. Moreover, the cotton prices have fallen to some extent given the bumper crop this year.

Talking about the reasons behind decline in business for these mills, Nair said, “Currently the western market is in a major financial crisis following which the retail sales have been declining. The impact has directly and indirectly fallen on Indian textile mills which export fabric and apparels. The business confidence of these mills have been affected severely.”

On its part, the textile ministry had forwarded their representations to the Reserve Bank of India (RBI). However, with the apex bank stating that the onus of interest rates on loans for industries lies with individual banks, the ministry has begun talks with the latter.

“We are in the process of holding talks with each of these banks to offer low interest rates to overall textile industry to ease the inflationary pressures,” said J N Singh, joint secretary, ministry of textiles.