PM gives textile exporters all ears… but no promise

After futile visits to the Commerce and Finance ministries, textile exporters today sought Prime Minister Manmohan Singh’s...

After futile visits to the Commerce and Finance ministries, textile exporters today sought Prime Minister Manmohan Singh’s intervention in putting the sector, which has been hit hard by the fast appreciating rupee over the last one year, back on track. A delegation led by Confederation of Indian Textile Industries (CITI) chairman P D Patodia met the Prime Minister and apprised him of the importance of the sector in terms of employment and the negligible import intensity that comprises it.

“Exports account for more than half of the production in the industry today and though other industries that have some import content have managed to battle currency appreciation, we have emerged as the worst victim of it,” Patodia pointed out. Currencies of competing countries like China, Pakistan and Bangladesh have either appreciated moderately or depreciated.

The Prime Minister assured the exporters of all help but did not not give a timeline or accede to any of the points on the exporters’ four-point charter. “I am aware of the importance of the textile sector as also of its labour and export capabilities. I am also aware of the difficulties that it is facing on account of the rupee appreciation,” the PM said. “We take into account your suggestions for relief and are looking at solutions that are do-able.”

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The delegation included Federation of Indian Chambers of Commerce and Industry Secretary General (Ficci) Amit Mitra, chairmen of the Cotton Textiles Export Promotion Council, Synthetic & Rayon Textiles Export Promotion Council and senior vice-chairman of the Apparel Export Promotion Council. The chairman of the Department Related Parliamentary Standing Committee on Industry Santosh Bagrodia, too, was present at the meeting.

Meanwhile, the Commerce Ministry is likely to come up with a relief package for textiles for Cabinet approval later this week. The package is likely contain most of the industry demands like reduction in interest for packing credit, some state level refunds and one-year moratorium for existing loans.

“Of all the steps that are being discussed moratorium for existing loans is likely to not face any opposition as both the finance and commerce ministries and even the banks are in agreement on that. The threat of these loans turning into NPAs is looming large and banks are more than happy to grant one more year for repayment of the loans,” a commerce ministry official said.

The sector contributes 14 per cent to the overall industrial production, 4 per cent to the Gross Domestic Product, 16.63 per cent to the country’s export earnings and provides direct employment to over 35 million people.

Industry’s four-point charter of requests

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•Levies at state govt and municipality levels (amounting to 6%) should be returned on all textile and clothing products exports

•Pre-shipment and post-shipment credit should be provided to the textile and clothing industry at a flat interest rate of 6%

•Post-shipment credit should be extended from the present three months to a one year

•Service Tax applicable to all export-related activities should be withdrawn immediately

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•Moratorium on principal amounts for existing loans for a year to temporarily improve the industry’s cash flow

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