In the absence of profits, several hundred spinning mills especially small and medium enterprises are finding it difficult to service their debts. They want a debt restructuring scheme in place. Large scale units have the facility of corporate debt restructuring. This gives financially stressed units breathing space once the lenders are convinced of their viability.

However, such a facility is not available for small and medium enterprises, and with the revised NPA (Non Performing Assets) norms, both banks and the spinning sector are facing huge problems.

India has to necessarily export at least 150 million kg of cotton yarn per month due to the continued fall in demand from China. Also, small enterprises say, they have to market the yarn in other countries for which the Merchandise Exports from India Scheme benefit is essential to meet the additional transport cost. Therefore, they want the three per cent export incentive given to other textile exports to be extended to cotton yarn. This, they say, will revive the export performance.

The debt restructuring scheme helps enterprises affected by certain internal and external factors and minimises the losses to creditors and other stakeholders through an orderly and coordinated restructuring program.