The Hindu Business Line : Stimulus package inadequate for textile sector, says SIMA

Coimbatore, Jan 3 The Southern India Mills Association (SIMA), the largest representative body of the textile mills in the South, has dubbed the stimulus package announced by the Centre as “inadequate and negligible” for the textile industry compared to what the competing nations have offered to their industry to overcome recession.

SIMA wanted the Centre to have a re-look at the submissions made by the textile industry and come out with a fresh package to give a boost to it.

In a release issued on Saturday, Dr K.V. Srinivasan, Chairman, SIMA, Coimbatore, said the “marginal relief” in the value cap of duty drawback rates for cotton yarn (both grey and dyed) and grey knitted fabrics and extension of DEPB up to December 2009 were the only concessions for the industry in the second stimulus package and even in the upward revision of duty drawback rates, made-ups and dyed knitted fabrics have been ignored, which would discourage value addition.

He said the industry expected significant relief such as two-year moratorium on repayment of loans, a special package for working capital consisting of 7 per cent interest rate for cotton purchase, reduction in margin money for working capital from 25 per cent to 10 per cent, enhancement of credit limit from three months to nine months and 2 per cent increase in the interest subvention for export credit.

Though RBI guidelines permitted second time restructuring facilities, a specific direction was essential for availing two-year moratorium for the textile industry to avoid loans becoming NPAs.

The Indian Chamber of Commerce and Industry, Coimbatore, has expressed the view that apart from seeking to give a boost to industrial production, attention should turn towards farm sector and the Government should come out with a special package for textiles, automobiles and SME sectors.

Mr Mahendra Ramdas, President, ICCI, said the stimulus package announced by the Government and the measures announced by the RBI were welcome.

But the chamber has apprehensions as to whether the anticipated reduction in interest rates would happen soon and he wanted the interest rate to be cut by 3 per cent immediately.

He was of the view that the release of about Rs 20,000 crore of bank funds might not ease the liquidity crunch due to banks’ ‘risk aversion’, going by the past experience. The ICCI has been asking for a two-year moratorium on bank loan repayment and abolition of fringe benefit tax and securities transaction tax but the latest package skipped these issues.

Mr Ramdas described the proposal to cut import duty on essential goods to bring down prices and boost demand as ‘ill-advised’.