Textile body requests Centre to enhance working capital limit
The Dollar Business Bureau
In a bid to seek help from the impact of demonetisation on the textile industry, the Southern India Mills' Association (SIMA) has asked the Centre to come up with remedial measures including enhancing the working capital limit by 50%.
The sector is already coping up with the downfall which has arisen from the decrease in yarn exports followed by the withdrawal of around 86 percent of the currency in circulation. This has severely affected the industry in terms of reduced inflow of cash to carry out day-to-day such as purchasing raw material and sale of finished goods.
The association has already sent a representation to the Union Textiles Minister Smriti Irani conveying the same concerns in the backdrop of the textile retail showrooms and shops witnessing low sales. This has led to the stocks getting piled up and the textile units not being able to collect any receivables.
According to SIMA Chairman Senthil Kumar, the situation has become even more serious with the cotton price having increased by around Rs 2,000 per candy as the arrivals in the market came to a grinding halt during the first 10 days of being hit by demonetisation.
Kumar insisted that though the situation has improved by 50-60 per cent, it would take another six months for the industry to rise above the biggest ever cash crunch the economy has witnessed.
While the government has already announced two months moratorium for loans up to Rs 1 crore, the textile industry needs at least one year moratorium period for repayment of the dues and interest.