Pushed to the near fatal situation in the crisis ridden US and Europen markets, the textile industry has sought immediate government intervention warning workers lay-offs are inevitable.
The five major export and manufauring associations have said the sector which is the largest employers in India’s manufacturing area is currently going through a very critical phase and unless remedial measures are taken by the government a large number of units will face closure and about 7 lakh workers will be rendered jobless.
?The international credit crisis which has also spread to the Indian economy has resulted in a negative growth both in case of production and exports by almost 25% in the sector. A large number of units have closed and others are in serious problems. the chairman of the Confederation of Indian Textile Industry (CITI), R.K.Dalmia pointed out at a press conference here on Wednesday.
While the international credit crisis is beyond the control of the Indian government, the present crisis of the textile industry could have been prevented with proper policy support from the government,he added.
One of the major problems faced by the segment today is liquidity crunch since the banks are not in a position to extend loans and where they provide loans, the interest rates are too high.
Over Rs 2000 crore is peding with the government by way of Technology Upgradation Fund Scheme (TUFS) assistance which has yet not been released for the period beyond September 2007.
Dalmian has urged the government that to make an additonal provision of Rs 2000 crore immediately under TUFS for the current fiscal so that the backlog of the last year and the current year couls be cleared.
He suggested that soft loans at concessional rates may be extended to the secctor. Power shortage is another major issue that the sector is facing.
A represeentative from Southern India Mills Association (SIMA), S.V.Arumugam said in Tamil Nadu, there is a power cut of 50% currently and the situation is likely to worsen in the coming months. He suggested that the government should encourage captive power generation by the textile units by reimbursing the difference between the cost of self-gneration and the cost of grid power.
Tamil Nadu accounts for 40% of spinning activity in the country and 30 per cent of the entitre industrial activity in the textile chain. Most of the units in the state are facing the risk closure unless remedial measures are taken immediately.