Stalin asks Modi to withdraw import levy on cotton, support in textile sector

CHENNAI: Chief Minister MK Stalin on Wednesday urged Prime Minister Narendra Modi to provide financial support to the MSMEs in the textile sector and withdraw 11% import levy on cotton to spare them from steep increase in cotton price.

In his demi-official letter to the PM, Stalin described spinning sector as a vital engine of Tamil Nadu's industrial economy employing 15 lakh employees in 1,500 spinning mills and said that the combination of high cotton prices, increased operational costs, including bank interest rates and poor demand in domestic and international markets, has plunged the sector into such a severe crisis that the spinning mill association declared a production stoppage from July 15th onwards.

Citing the commencement of repayment of short-term loans disbursed under ECLGS to rehabilitate MSMEs during Covid, the CM requested the PM to provide financial support for MSMEs in the textile sector under ECLGS by extending the moratorium by one more year.

Imploring the union government to restructure the existing loans and convert them into six-year term loans, the CM said that fresh loans may be provided under ECLGS, reducing the regular banking interest rate.

Seeking the withdrawal of 11% import levy on cotton to reduce production cost, the CM asked the union government to consider a ban on the export of waste cotton from India temporarily to tide over the shortage of waste cotton being faced by the Open-End spinners who fall under the micro-enterprises category but contribute to 35% of the yarn production of the country primarily used in low-end fabrics.

Stating that the measures would go a big way in bringing back employment in the spinning mill sector, Stalin reiterated his request for extending the time for the cash credit limit of spinning mills to purchase cotton to 8 months from the current three months and for the reduction in margin money sought by the banks to 10% from the 25% of the purchase value.