Amidst the challenging conditions caused by the prolonged Ukraine war and the resulting economic crisis, the Tamil Nadu Spinning Mills Association (TASMA) has reached out to the Indian Bank Association (IBA) for financial assistance to support the financially-strained spinning sector.
In a letter addressed to the IBA Member-Secretary, TASMA president AP Appukutti has requested several measures to alleviate the situation. Firstly, he urged for an extension of a one-year moratorium on the repayment of principal amounts borrowed by spinning mills during the COVID-19 period.
Additionally, he sought the conversion of three-year loans obtained under the ECLGS (Emergency Credit Line Guarantee Scheme) into six-year term loans.
Moreover, Appukutti pleaded for the provision of necessary financial aid to alleviate the stress on working capital, on a case-by-case basis. He highlighted that the predominantly cotton-based Indian spinning segment has been facing an unprecedented crisis over the last two years due to various factors, with a major issue being the recession in various countries.
The decline in exports has been significant, with around a 50% drop in cotton yarn export, a 23% drop in overall exports of cotton textiles, and an 18% drop in total textiles and clothing products during the financial year 2022-23. The scarcity of raw materials at competitive rates, such as the higher cotton price due to an 11% import duty on cotton and disruptions in the supply of man-made fibre raw materials, has contributed to these challenges.
Rising costs, especially the considerable increase in power charges in Tamil Nadu since September, have further burdened the spinning industry during this recessionary period.
The absence of free trade agreements (FTAs) with major markets like the EU and the US has also impacted Indian textile exports, leading to higher tariffs compared to competitors like Pakistan, Bangladesh, and Vietnam.
As a result of these developments, small and medium enterprises are struggling to service their debts, and with loan repayments commencing after the COVID-19 moratorium, some mills may be compelled to file for insolvency.
In light of these circumstances, TASMA has requested financial support from banks, emphasizing the spinning sector's significance as a capital-, labour and power-intensive industry.
Appukutti stressed that the financial stability of the spinning segment is crucial to sustaining the global competitiveness of the textiles and clothing industry, which provides employment to over 110 million people, especially those below the poverty line and women.
To sum up, the Tamil Nadu Spinning Mills Association seeks vital financial assistance from the banks, considering the pressing challenges faced by the spinning sector and its essential role in the overall textiles and clothing industry.
