Stalin calls for Centre’s attention over steep increase in cotton prices
Stalin said high cotton prices, increased operational costs, including bank interest rates and poor demand has severely affected the MSME sector.
Chennai: Tamil Nadu Chief Minister M K Stalin on Wednesday flagged with the Centre, the ‘steep’ increase in cotton prices and urged for the withdrawal of import duty among others to mitigate the situation for the MSME sector.
In a letter to Prime Minister Narendra Modi, Stalin said high cotton prices, increased operational costs, including bank interest rates and poor demand has severely affected the sector.
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The spinning sector, with 1,500 mills and around 15 lakh employees, was one of the vital engines of the industrial economy of Tamil Nadu, he said.
The sector was in “such a severe crisis that the spinning mill association declared a production stoppage from July 15, 2023 onwards.” He said the repayment of loans provided under the Emergency Credit Line Guarantee Scheme (ECLGS) to revive and rehabilitate MSME units following the Covid-19 pandemic has started, “which has become an additional burden on the spinning mills and increases the cost of production.” Another significant price differentiator between India and its competitors internationally was the 11 per cent import duty imposed on cotton.
Stalin recalled having earlier requested for extension of the time for the cash credit limit of spinning mills to purchase cotton to 8 months from the current 3 and for the reduction in margin money sought by banks to 10 per cent from the 25 percent of the purchase value.
He requested for more measures in the interest of the MSME sector, including withdrawal of the import duty on cotton, saying it will reduce the production cost significantly,.
“I request the Union Government to provide financial support for MSMEs in the textile sector under ECLGS by extending the moratorium by one more year. Existing loans under ECLGS may be restructured, converting them into six-year term loans, and fresh loans may be provided under ECLGS, reducing the regular banking interest rate,” he told Modi.
Centre should also consider a ban on the export of waste cotton temporarily to tide over its shortage being faced by the Open-End spinners who fall under the micro-enterprises category, the TN CM insisted.
