Textile debt recast flops as mills fight to avoid NPA tag
Senior industry executives said roughly 40% of the 307 textile units are based in southern India. Big mills including Alok Industries, Arvind Mills, Century Textiles & Industries, Vardhman Textiles, Trident and Welspun don’t feature in this list.
Last year, the ministries of finance and textiles had agreed on a restructuring of textile sector loans worth R35,000 crore to bail out cash-starved mills which fell into a debt trap due to the sudden fall in product prices after two years of steady rise in raw material costs. However, after the RBI declined to tweak its prudential norms which stipulate that repeated instances of debt restructuring be declared NPAs, the finance ministry had asked respective banks to consider these cases at their end even though no concession on the NPA front came by.
“Only a few proposals have been cleared by banks now, and around two-thirds of cases are still under consideration. The process will be expedited,” said a senior government official.
The textile industry has now requested the government to consider easing guidelines under TUFS to allow concessions to even those mills whose loans have been declared NPAs due to the second restructuring, Nair said.
The government mainly provides interest subsidy against loans to textile units, apart from capital subsidy as well as limited cushion against exchange rate fluctuation, for investing in new technology at existing units as well as to set up new units with state-of-the-art technology so that their viability and competitiveness in the domestic as well as international
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