The spinning mills of southern India have moved the textile ministry to bail-out them from inevitable liquidity crunch caused by increasing yarn stock, poor offtake and long pending TUF subsidies.
A fund of R3,000 crore should be allotted in the forthcoming Budget to clear all the subsidies pending right from April 1, 2007 and protect over R65,000 crore of investments from becoming NPAs.
In his interactive meeting with Union textile commissioner Kiran Soni Gupta on Monday, Southern India Mills’ Association (Sima) chairman T Rajkumar urged Gupta to expedite the bail-out package to save thousands of small and medium units from becoming non-performing assets.
The mills have been mainly affected by sudden drop in the yarn exports from April 2014 owing to reduced demand from China, the major market for yarn, and also GSP plus (Generalised System of Preferences) agreement entered by Pakistan with EU countries, the Sima chairman said.
According to him, the textile industry, mainly spinning sector, is undergoing a severe crisis due to issues relating to TUFS (technology upgradation fund scheme), higher tariff rates for Indian textile products in all the major international markets, power-related issues and currently steep fall in cotton prices internationally and MSP operations in the domestic market.