Tamil Nadu - Coimbatore   

Stimulus package: textile sector ignored

COIMBATORE: The Cotton Textile Export Promotion Council has appealed to the Union Government to announce a special stimulus package taking into account the sector’s credit needs.

Council chairman V.S. Velayutham has said in a release that the textile sector was disappointed with the second stimulus package announced by the government. “It does not contain anything to stimulate the sluggish exports in the sector.”

Restoration of the Duty Entitlement Passbook Scheme to pre-November 2008 levels would not benefit exporters of cotton textile products.

It would benefit only those making select items.

Competing countries such as China had increased tax rebates from 13 per cent to 17 per cent in 2008 to support the growth of labour intensive sectors.

The industry’s demand for restoration of the subvention of remaining 2 per cent in interest rates for pre and post shipment credit was also not met.

The cotton textile industry should be provided credit at 7 per cent. The industry’s request for a moratorium for two years was also not considered by the government, he said.

Chairman of the Confederation of Indian Textile Industry R.K. Dalmia has said in a release that the global economic crisis had eroded demand for textile products and this had hit the major textile exporting countries. China and Pakistan had taken significant remedial measures to address this problem.

The government’s refusal of a moratorium on repayment of term loans was bound to lead to extensive loan defaults, resulting in a number of large Non-Performing Assets that would have serious impact on the textile and the banking sector.

The government should have at least restored the duty drawback levels to those that prevailed before September 2008.

The 4 per cent interest subvention allowed in export credit was withdrawn from October 2008. Of this, 2 per cent was reinstated in the first stimulus package. The industry expected the remaining 2 per cent also to be restored. However, the government had not done so.

The industry was in no position to invest in modernisation. The interest rates even for working capital loans were unaffordable for the industry. The textile and clothing sector was in a crisis and the coming months would see substantial closure of units if the government failed to take remedial steps immediately, he said.

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