The Southern India Mills’ Association (SIMA) has appealed to the centre for export benefits to cotton yarn, expediting a Free Trade Agreement (FTA) with the EU and debt restructuring facility for SMEs to save the textile industry’s spinning sector in the face of falling cotton yarn exports.
SIMA chairman, M Senthilkumar in a memorandum submitted to union commerce minister Nirmala Sitharaman said the spinning sector has been under severe financial stress since April 2014 due to the drastic fall in cotton yarn exports that have plunged from over 140 million kgs at the beginning of 2014 to the current level of around 100 million kgs largely because of decreasing demand from China.
He said MEIS benefits are essential to meet the additional transport cost of exporting to other countries, and that the three per cent export incentive extended for other textile exports also should be extended for cotton yarn to revive export performance.
Sentilkumkar pointed out that Indian textile goods attract 4 to 16 per cent duty in EU while the majority of the competitors like Vietnam, Cambodia, Bangladesh, Pakistan, Turkey and Sri Lanka enjoy zero duty access in EU. He said the EU accounts for over 40 per cent of Indian textile exports and therefore, it is essential to conclude FTA on a war footing.
He said the textile industry in general and spinning sector in particular, has been going through a bad patch and in the absence of profits, several hundreds of spinning mills are finding it difficult to service their debts. He said large scale units have the facility of corporate debt restructuring that gives them breathing space once lenders are convinced of the viability of the units. But such facility was not available for SMEs and with the revised NPA norms both the banks and spinning sector are facing huge problems.
Senthilkumar claimed commerce minister has assured that she would consider all the three pleas favourably and take necessary steps, a SIMA release said.
