Spinning mill owners planning to approach the government for a bailout package to save thousands of small and medium units from becoming non-performing assets, a sectoral body said.
The sector has been mainly affected by sudden drop in the yarn exports from April 2014 owing to reduced demand from China and also GSP plus agreement entered by Pakistan with EU countries, Southern Indian Mills' Association (SIMA) chairman T Rajkumar said.
Though the cotton price is ruling at rock bottom, mills were not in a position to procure cotton due to liquidity crunch caused by increasing yarn stock, poor off take and long pending Technology Upgradation Fund (TUF) subsidies, he said.
A fund of Rs 3,000 crore need to be allotted in the forthcoming budget to clear all the subsidies pending from April 2007 and protect over Rs 65,000 crore of investments from becoming NPAs, Rajkumar claimed.
The industry has already made investments and started making repayments of both principal and interest regularly during the last several years and therefore, there was no need for a study by a third party agency because of which the issue was unnecessarily getting delayed, he said.
Highlighting various issues related to TUF affecting the mills, he said that if there was any problem, that too in rare cases, it could be addressed at a later stage, as the scheme was vogue from April 1999 and extended up to March 2017, the benefits could be extended to the affected cases to have a level playing field and also to sustain the financial viability of the affected cases.
