New Delhi, July 1 (UNI) Textile industry today urged the Government for immediate abolition of import duty on cotton, reduction in margin money for working capital loans and allocation of additional funds under Technology Upgrdation Fund Scheme (TUFS) to bail out the sagging sector.
Besides immediate abolition of import duty on cotton, the industry is also demanding reduction in margin money from 25 per cent, applicable for working capital loans for cotton purchases, to 10 per cent as a temporary measure for one year and allocation of additional funds of Rs 2,000 crore under TUFS for the current year to meet the current backlog of nearly one year in disbursement of the fund assistance.
In meetings with the Union Ministers of Textiles, Finance and Commerce, the textile delegation pointed out that cotton prices in the country increased by over 35 per cent during the last one year and this vital raw material has disappeared from the market because of speculative operations of international traders.
''The textile and clothing industry is going through a serious crisis because of the unabated increase in cotton prices which has eroded its exports competitiveness coupled with the appreciating rupee. The series of onslaughts being faced by the industry will cripple its growth and employment generating potential,'' Confedration of Indian Textile Industry (CITI) Chairman P D Patodia said, while addressing a press conference here.
In its interface with the ministers, they pointed out that the price increase in cotton in the domestic market is basically due to uncontrolled export of cotton. The official figures put cotton exports for the current year at 85 lakh bales as against 58 lakh bales last year.
However, the industry estimates indicate that actual exports during the current cotton year would surpass one crore bales, further aggravating the present situation, they added.
''The anomaly is that even at higher prices, textile mills are not able to get cotton at the required quantity, which will force them to cut back the production,'' Mr Patodia said, adding that any production loss in the textile sector will have serious impact on employment generation in the country.
The delegation suggested that a mechanism may be evolved for assessing the cotton needs of Indian textile industry periodically and permit export of cotton only to the extent of exportable surplus available. The assessment can be done by Government's Cotton Advisory Board on a quarterly basis and quantities may be released for exports for each quarter on the basis of this assessment.
They also stressed that as an emergency measure, export of cotton may be suspended immediately for the period up to December 31, 2008, as by this time the new crop would arrive and the situation can be reviewed.
The delegation made it clear that the profitability of the sector has come down significantly and it would lead to default on repayment of loans and increased mill closures in the coming months.
UNI BBS SG KP1734