In a letter written to the finance minister, an apex body of textiles and allied industries has said that the industry is facing significant disadvantages in the international market due to the rupee appreciation, high interest rates and high power and transaction costs, making movement of raw material and goods costlier and time consuming.
It has caused over two dozen major textile companies including Abhishek Industries, Alok Industries, Arvind Mills, Bhilwara Spinners, Bombay Dying, Century Enka, Ginni Filaments, Nahar Spinning, Raymonds, Siyaram Silk Mills and Welspun India to report a negative growth during the third quarter of the current year as against the same period in 2006-07.
If the remedial measures are not taken, 2008 will see the continued downtrend, noted the memorandum from the Confederation of Indian Textile Industry.
To tide over the crisis, the industry has asked for the introduction of a mechanism for reimbursement of state level duties amounting to around 6% of exporters? textile goods.
Similarly, it has stressed the need for fixation of interest rates for packing credit in foreign exchange (PCFC) at LIBOR plus 0.5% and grant conversion of existing rupee packing credit to PCFC. The memorandum has also requested that a moratorium of one year be allowed for repayment of the principal amount of term loan taken by textile units in order to avoid cash crunch and Non-Performing Assets (NPA).
Also, enhancement of allocation under Technological Upgradation Fund Scheme (TUFS) has been sought from the present Rs 10,90 crore in order to ensure that the current delay of nearly one year for disbursement of assistance does not spill over to 2008-09.