Ease of doing business for MSMEs: Tamil Nadu Chief Minister MK Stalin on Wednesday wrote to Prime Minister Narendra Modi drawing his attention to the ‘steep’ surge in cotton prices and also requested him to withdraw the import duty among others in order to provide relief to MSMEs, according to a PTI report. Stalin said that high cotton prices, increased operational costs including bank interest rates and poor demand had hit the sector.
“The spinning sector, with 1500 mills, and around 15,000 employees, was one of the vital engines of the industrial economy of Tamil Nadu,” Stalin said.
According to the Tamil Nadu Chief Minister, the spinning sector played a crucial role in Tamil Nadu’s industrial economy, operating with 1,500 mills and a workforce of approximately 1.5 million employees.
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He said that the sector was in “such a severe crisis that the spinning mill association declared a production stoppage from July 15, 2023, onwards.” The minister added that the repayment of loans provided under the Emergency Credit Line Guarantee Scheme (ECLGS) to MSMEs has started, “which has become an additional burden on the spinning mills and increases the cost of production.”
Another factor that set India apart from international competitors was the 11 per cent import duty on cotton, PTI reported.
Stalin also recalled the earlier request for an extension of the cash credit limit of spinning mills to purchase cotton from the present 3 months to be extended to 8 months, as well as the reduction of margin money sought by banks from 25 per cent to 10 per cent of the purchase value.
“I request the Union Government to provide financial support for MSMEs in the textile sector under ECLGS by extending the moratorium by one more year. Existing loans under ECLGS may be restructured, converting them into six-year term loans, and fresh loans may be provided under ECLGS, reducing the regular banking interest rate,” he told PM Modi, as reported by PTI.
Stalin further appealed to the government to consider a ban on the export of waste cotton temporarily to meet the shortage of supply faced by open-end spinners who come under the category of micro-enterprises.