The Indian textile industry has been facing a long-drawn recession since April 2014 owing to the global economic slowdown and the higher tariffs imposed on Indian textiles and clothing products in all the major markets than on those from the competing nations like Pakistan, Bangladesh, Vietnam, Turkey, Cambodia, etc. Realizing the need for enhancing the industry competitiveness, the Union Government has extended the two per cent MEIS benefit and the three per cent IES benefit for all textile products other than cotton yarn. The spinning sector has appealed to the Government to extend the export benefits for cotton yarn also as it is the worst affected due to surplus capacities.
The Cabinet Committee has already approved extending the TUF scheme for the entire 13th Five-Year Plan period and also approved allocation of Rs. 17,822 crores to meet the committed liabilities of the schemes in the pipeline, as also the ongoing and new schemes. Under the amended TUF scheme, the spinning sector has been excluded while 15 per cent capital subsidy has been extended for garments and technical textiles and 10 per cent subsidy for weaving and processing sectors. The interest subsidies ranging from two per cent to six per cent extended under the earlier scheme have been discontinued.
In a press release, Mr. M. Senthilkumar, Chairman, Southern India Mills’ Association (SIMA), has appealed to the Union Finance Minister to allocate adequate funds for clearing the TUF subsidy backlog since September 2014. As the subsidy is pending for more than 1½ years, the working capital has been totally eroded and most of the spinning mills are incurring cash losses due to glut in the market.
The SIMA chief has stated that the Union Budget 2016-17 has allocated only Rs. 1,480 crores for TUFS as against the actual requirement of around Rs. 7,000 crores. He has appealed to the Finance Minister to allocate the balance fund of around Rs. 5,500 crores to meet the liabilities of the backlog period and also to meet the liabilities up to March 31, 2017.
Hundreds of textile units are likely to become NPAs as the TUF subsidy has not been released on time. Hence the need for the Union Finance Ministry to allot the required funds immediately to avert such a crisis.