Indian textile companies seek government intervention in the collapse of textile companies
India’s Apparel Export Promotion Council (AEPC) said on Wednesday that due to the impact of the global market slowdown, the textile industry has requested the government’s immediate intervention to prevent workers from losing their jobs and small businesses from closing down. “There are about 45 million people employed in the textile industry. About 7-10% of people in the textile industry have lost their jobs in the past two years. The unemployment trend is still continuing. If the government does not intervene immediately, more people will lose their jobs,” AEPC President Sakthivel said on Wednesday. He said the lack of cooperation from domestic banks was the main trouble for the textile industry, which had been hit by a double blow due to the economic crises in the United States and Europe.
These two markets account for nearly 65% of India’s textile exports. “Banks are one of the biggest problems facing the textile industry. Banks have issued closure notices. A few small businesses are facing closure due to credit problems. Banks are also creating trouble in terms of reasonable interest rates on credit,” he said. The textile industry asked the central bank to restructure loans. The loan burden of the textile industry is estimated to be around Rs 1 trillion. Cotton and cotton yarn prices suddenly soared in October 2010, followed by yarn prices plummeting in April 2011 due to sluggish demand in Western markets, leading to a huge credit crisis in the textile industry. “The textile industry also faces issues such as rising raw material prices and high-cost loans,” Sakthivel said. In addition to ensuring the supply of raw materials, he also requested export incentives and interest subsidies to cope with the severe economic situation.
To overcome these problems, the government should provide a 2% interest subsidy to the textile industry in the upcoming foreign trade policy, he said. Increasing investment in the textile industry will help stem the loss of jobs,” he said. He also called for a long-term cotton export policy to maintain cotton reserves. In addition, the chairman suggested a number of other export incentives, including for key markets Plan discounts for key market products to promote apparel exports.
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