Stalin said high cotton prices, increased operating costs (including bank interest rates) and sluggish demand had severely affected the MSME sector.
Release date – 03:40 PM, Wednesday – July 19
Chennai: Tamil Nadu Chief Minister Stalin told the center on Wednesday that cotton prices had risen “sharply” and urged removal of import duties, among other things, to ease the situation for the MSME sector.
In his letter to Prime Minister Narendra Modi, Stalin said high cotton prices, increased operating costs such as bank interest rates and weak demand had severely affected the industry.
With 1,500 factories and about 1.5 million employees, the spinning industry is one of the vital engines of Tamil Nadu’s industrial economy, he said.
The industry is in “a crisis of such magnitude that the Association of Spinning Mills has announced a shutdown from 15 July 2023”. He said that loans under the Emergency Credit Line Guarantee Scheme (ECLGS) for the revitalization and recovery of MSME units have started to be repaid after the Covid-19 pandemic, “which has become an additional burden on spinning mills and has increased production costs.” Another significant price difference between India and its international rivals is the 11 percent import tax on cotton.
Stalin recalled an earlier request to extend the cash credit limit for spinning mills to purchase cotton from the current three months to eight months, and to reduce the security deposit required by banks from 25% to 10% of the purchase value. .
He called for more measures to benefit micro, small and medium-sized enterprises, including the removal of duties on cotton imports, which he said would significantly reduce production costs.
“I request the federal government to extend the moratorium for another year under ECLGS to provide financial support to MSMEs in the textile sector. Existing loans under ECLGS may be restructured to convert them to six-year loans and may New loans will be made, reducing regular bank rates.”
TN CM insisted that the center should also consider temporarily banning the export of cotton waste to address the shortage faced by open spinning mills belonging to the category of micro-enterprises.
