The Southern India Mills’ Association has appealed to Union Finance Minister Nirmala Sitharaman to exempt cotton from 11 % import duty between April and October when the farmers usually complete sale of cotton stocks with them.
Association chairman S.K. Sundararaman said the country produces only five lakh bales of Extra Long Staple (ELS) cotton as against the requirement of 20 lakh bales annually. Indian textile and garment exporters have established their market in superfine cotton textiles made out of ELS fibre, especially Pima cotton produced in the US and Giza cotton produced in Egypt. The value addition in these cottons is around ten times and for several products, Indian ELS cotton varieties are blended with the international ones.
He appealed to the Finance Minister to exempt the Pima and Giza cotton from the import duty as India does not produce similar quality cotton. India consumes around 45% of the Pima and Giza cotton produced.
Mr. Sundararaman said the predominantly cotton-based Indian textiles and clothing industry is facing an unprecedented financial stress and crisis for more than a year owing to steep fall in global and domestic demands. The average monthly textile and clothing exports from April 2022 to August 2023 dropped by 19% year-on-year.
The entire textile value chain, particularly the capital intensive spinning sector, had to cut down production 30 % to 40 % for several months that has pushed several textile mills to loan defaults.
“Under the current crisis, apart from regular loan repayment schedule, the Emergency Credit Line Guarantee Scheme (ECLGS) 1.0 has already increased the impact on the financials and the ECGLS 2.0 repayment to be made from October, would drive majority of the spinning mills to become NPAs,” he said.
The association sought extension of time for repayment of ECGLS short term loans offered as a COVID relief measure, and convert these into three-six years term loan to reduce the financial burden for the textile units and avoid becoming NPAs.
