Texpreneurs to submit report on financial stress faced by the Indian textile industry

Texpreneurs Forum is planning to submit a report on the financial stress faced by the textile industry in the last 2-3 year to the Finance Ministry for that they are in the process of appointing an external agency to conduct a study of the textile industry.

D Prabhu, Secretary, Texpreneurs Forum said that this is consequent to their meeting with the powers that be at the Centre and the recommendations made by the Textile Ministry to the Department of Financial Services under the Union Finance Ministry for lowering the interest on working capital loan for purchase of cotton.

The Forum also expressed the felt need for a time bound interest subvention mechanism for procurement of cotton. Due to unprecedented fluctuation in cotton prices and consequent erosion in working capital, high interest cost and reduction in demand due to change in China’s inventory policy among others the textile industry since 2011 has been put to hardship.

The Forum has, in its pre-budget memorandum stressed the need for rationalization of duty structure – both central excise and customs – of polyester and viscose fiber to enable the Indian manufacturers access the rapidly growing global MMF (Man Made Fiber) apparel market.

The Texpreneur Secretary said that the excise duty should be slashed to 4 – 5 percent from the present 13 percent and the import duty from a high of 28 percent to around 2 -3 percent. The contention that the cotton economy would be impacted if the MMF duty structure is rationalized will not hold good as there is huge demand for blended apparels, where the share of cotton is still around 65 – 70 percent. MMF fiber, clusters like Tirupur are losing out to competing countries as they are not competitive in the 30- 35 percent.

Prabhu also emphasized the need for suitable enhancement in budget allocation to cover the backlog and early disbursement of TUF subsidy would give the industry some respite as it is now facing huge working capital stress.