The Hindu Business Line : SIMA hails economic package, but wants more

Coimbatore, Dec. 9 The Southern India Mills Association (SIMA), Coimbatore, has welcomed the Centre’s measures for economic stimulus, but has expressed hope that the Government would announce a two-year moratorium on loan repayment to prevent loans from becoming NPAs.

It has also sought exemption of levies on high speed diesel (HSD) used for power generation to provide relief to industries dependent on captive power generation.

In a statement, the SIMA Chairman, Dr K.V. Srinivasan, said the textile industry that was affeted by various negative developments in the past two years — such as appreciation of rupee against US dollar, increase in raw material cost, declining demand, rising interest rate, reduction in export incentives and acute power shortage — has been pressing the Government for measures to save the industry.

Allocation relief

He said the allocation of Rs 1,400 crore to clear TUF arrears, allocation of Rs 1,100 crore to clear CST/TED arrears and additional allocation of Rs 350 crore for export incentive scheme would provide succour to the textile mills and enable them to procure cotton during the cotton season.

The SIMA Chairman said the 2 per cent interest subvention on packing credits should be hiked to 4 per cent as the relief announced would give only marginal benefit.

Dr Srinivasan wanted exemption of HSD used for captive power generation from taxes as this was the only option for states like Tamil Nadu, where the power crisis would persist for three to four years.

‘Halt repayments’

He reiterated the demand for a two-year moratorium on loan repayment to the textile industry and demanded restoration of the duty drawback rates, which were drastically reduced recently.

Mr Mahendra Ramdas, President, Indian Chamber of Commerce and Industry, Coimbatore, said the main reason for spinning mills being hit by recession was the high cotton prices. He wanted the minimum support price for cotton to be reduced to provide a stimulus to the textile industry.

The interest rate on export credit should be lowered by 5 per cent and the fringe benefit tax as well as the securities transaction tax should be abolished as they are “economically unjustifiable”, he said.

Fuel price

The chamber president said the Government should reduce prices of petroleum product or allow the industry to take CENVAT credit on petroleum products that could be set off against the duty paid on product prices. He wanted petrol price to be reduced to Rs 35 a litre and diesel price to Rs 28 a litre in view of the fall in crude oil price.

Mr Ramdas said there was an urgent need to bring down the interest rate below 10 per cent. The Government should prevail upon banks to extend liberal assistance to the industry, particularly MSME and textile sectors, he added.

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