CITI has asked the government to extend the tax incentive scheme to the entire textile industry to combat a sluggish market. The organisation has also requested the government to transfer its subsidies directly to farmers’ bank accounts instead of offering them a minimum support price for their goods.
Sanjay Jain, Chairman says, textile and clothing segments are presently going through a deep crisis due to uncompetitive fibre prices, declining exports, incompetitiveness of our products in international markets, embedded taxes not getting refunded, and lack of working capital, among others. Exports of cotton yarn are also suffering. Fibre exports dipped 33 per cent during the first quarter of current financial year which ended in June with exports at 226 million kg compared to 338 million kg during the same time period a year ago. Domestic demand for textile also declined around 15 per cent.
CITI hopes for increased market incentives but also warns against promoting new spinning mills. It has urged the government to refrain from incentivising new spinning mills for three years to make sure that existing mills do not turn idle. It should instead focus on keeping operational mills going, especially that many spinning mills across India have cut prediction by between 15 per cent and 50 per cent due to reduced textile demand.