CITI Urged Central Govt

The Confederation of Indian Textile Industry (CITI) has urged the Central Government to initiate remedial measures to protect the textile industry that is hit by a decline in demand. R.K. Dalmia, chairman of the confederation, said in a release that the international credit crisis that had spread to the Indian economy had resulted in a negative growth, both in the case of production and exports, by the textile and clothing industry.

“There are reports of spinning mills and garment units getting closed in different parts of the country and the fabric industry which is highly decentralised is also facing serious problems.” One of the main problems faced by the industry was liquidity crunch. Over Rs. 2,000 crore was pending with the Government for Technology Upgradation Fund scheme and this had not been released by the Government since September 2007.

V.K. Ladia, chairman of the confederation’s sub-committee on investments, added that the delay in disbursement of the assistance under the scheme had contributed substantially to the current working capital problems of the textile and clothing industry. Shishir Jaipuria, deputy chairman of the confederation, said the government had announced an increase of around 40 per cent in the minimum support price for cotton for 2008-2009.

While the textile industry faced serious cash flow problems and credit crunch, cotton consumption was expected to decline significantly during 2008-2009. Average cotton prices were around Rs. 19,000 a candy in November 2007. This went up to Rs. 29,000 a candy a few months ago. However, with problems in the textile industry the prices had declined and were expected to touch Rs. 20,000 to Rs. 21,000 a candy.

The government should facilitate availability of working capital for cotton purchase for nine months against the current three to four months at 7 per cent interest. S. V. Arumugam, vice-chairman of the CITI, said the mills in Tamil Nadu were hit by nearly 50 per cent power cut and the situation was expected to worsen. The government should encourage captive generation by reimbursing the difference between the cost of self-generation and grid power. The CITI appealed to the Centre to extend the interest subvention of 4 per cent and increase the duty drawback rates. The loan repayment period should be extended, he said.

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