Textile units may get one year more to repay term loan
12 Mar 2009
The government has agreed to a 1-year moratorium on repayment of Technology Upgradation Fund Scheme loans taken by the textile units reeling under the impact of the global economic downturn.
The finance ministry has agreed for one-year moratorium on repayments of term loans under TUFS, a senior textile ministry official said.
''The good news is that the department of financial services and the finance secretary have agreed for loosening of the criteria (repayment of loan),'' textile secretary Rita Menon said at a Northern India Textile Mills' Association (NITMA) meet organised by PHD Chamber of commerce and industry. ''They have agreed for at least a one-year moratorium," she added.
She said the textile ministry had sought a two-year moratorium on repayment of term loans taken by the textile units.
The relaxation on repayment, will, however, be on a case-to-case basis, said some textile ministry officials.
TUFS loans are given to units of the various segments of the textile industry to help them overcome technological obsolescence.
The finance ministry may also consider lower rates of lending for textile units in line with RBI and commercial bank policies, she said.
The textile industry has also demanded lowering of the margin on loan for raw cotton to 10 per cent from the present 25 per cent and increase in the loan period to 180 days.
The industry's demand for scrapping of 5 per cent duty incentive on export of cotton is also being actively discussed, she said.
"Textiles industry is losing business from the US and Europe to Vietnam, Cambodia and Bangladesh, which enjoy stronger government support and are importing cheap cotton from India due to the 5 per cent duty credit script," according to Sunil Jain, president of NITMA.
