The Indian textile industry is facing tough challenge from China and Pakistan. Mills have been suffering from inadequate working capital and have been virtually pushed to a corner with raw materials becoming scarce. As cotton prices shoot up to Rs 5,800 a quintal, the textile industry is reeling under severe pressure and facing scarcity of raw material. The export market is not-so-favorable and cost of operations is rising.

The situation is virtually the same in all textile industry hubs in the country. Gujarat is somewhat better off but the situation in Telengana, Andhra Pradesh and Tamil Nadu is quite bleak.

Therefore, the industry demands an increase in export incentive to seven per cent from the present three per cent and finance at seven per cent in order to survive and remain competitive in international markets. The industry fears that if it fails to be competitive globally, the commodity will have to be sold domestically, triggering a glut. This could lead to huge losses for the industry and a drop in cotton prices in the ensuing season.

The textile industry wants a three per cent incentive for yarn, five per cent for fabrics and seven per cent for garments.