Punjab SMEs in textile sector urge govt to reduce interest rates
Updated: Jun 19, 2013 02:10:08pm
Chandigarh, Jun 19 (KNN) Agitated by the high cost of production, small and medium enterprises (SMEs) in the textile sector of Punjab have asked banks and financial institutions to reduce interest rates by half.
In a letter to the Prime Minister, Manmohan Singh, SMEs of the state have requested him to consider reducing the interest rate to seven per cent.
“The textile sector is the second largest employment provider segment after the agriculture. The sector is facing acute problems from global markets including China and we need support from the government,’’ said Shawl Club India, an Association of Woolmark Shawl Licensees in India.
“We request you (PM) to kindly consider making funds available to the SMEs textile sector at 7 per cent per annum to make the sector relevant for the rising competition,’’ it added.
In the letter they also stated that India had about 4.88 crore SMEs that employed 8.11 crore people and the sector had the potential to grow at an exceptional rate to become one of the primary drivers of the Indian economy as it is already contributing upto 9 per cent of the GDP and 36 per cent to the total exports.
Meanwhile, President of Apparel Export Association (AEA), Sanjeev Kumar Gupta told KNN, “The textile industry is under a lot of pressure. We are requesting the government to consider our problem and make funds available to SMEs at 7 per cent interest rate per year rather than the higher rate of 14 per cent.”
The industry has demanded a reduction in interest rates to be on par with the farm and agriculture sector which enables them to compete with overseas manufacturers who get funds much cheaper.
“We are urging the government to come up with new policies for MSMEs and particularly the textile sector to help the SME textile sector to grow in the domestic and international markets just like the farm and agriculture sector,” Gupta added.
The textile industry in Punjab is passing through the most tough and difficult phase in recent times. Punjab's textile sector mainly consists of small and medium units with considerable noteworthy textile units consisting of stand-alone spinning and fabric manufacturing units.
The total textile output of Punjab is estimated at Rs 10,500 crore, including Rs 3,250 crore exports of knitwear, shawls, made-ups and yarns. The direct and indirect employment of textile activity in the state is estimated at 2 million people.
The textile industry particularly the spinning units located in Punjab are suffering more because of the higher taxes and levies, higher cotton cost and power shortage," said the AEA President.
Taxes in Punjab are far higher than other states. Further, the state has a location disadvantage; logistic costs are higher considering that Punjab is far from sea ports.
With regard to power, “The Punjab industry is also facing power shortage which has resulted in a slowdown of manufacturing growth besides loss on production. The cost to electricity in Punjab is also higher when compared to neighbouring states like Himachal. The cost of electricity in Himachal and some of the other states is Rs 3.50 per unit while in Punjab it is more than Rs 6 per unit,” Secretary, Knitwear Club / Shawl Club of India, Chiranjeev Singh said, perturbed by higher taxes levied on Punjab industries.
Furthermore, the state has been facing an acute shortage of skilled labours, Chiranjeev added.
Meanwhile, Shawl Club (India) Amritsar, General Secretary, Piara Lal Seth told the media that the textile industry in SME sector was struggling to compete both in global and domestic markets. He too attributed it to the high rate of interest at 14 per cent per annum, charged by banks and financial institutions - the highest in the world.
The high cost of production, he said has particularly affected the export of textiles.
The issue of interest rate for SME Textile sector being at par with the agriculture sector was taken up by the Confederation of Indian Industry and Shawl Club (India), Amritsar during a meeting with RBI in November 2009. At that time, though it was principally agreed by the Ministry of Finance, New Delhi, it was made applicable only to the handloom sector. (KNN)
In a letter to the Prime Minister, Manmohan Singh, SMEs of the state have requested him to consider reducing the interest rate to seven per cent.
“The textile sector is the second largest employment provider segment after the agriculture. The sector is facing acute problems from global markets including China and we need support from the government,’’ said Shawl Club India, an Association of Woolmark Shawl Licensees in India.
“We request you (PM) to kindly consider making funds available to the SMEs textile sector at 7 per cent per annum to make the sector relevant for the rising competition,’’ it added.
In the letter they also stated that India had about 4.88 crore SMEs that employed 8.11 crore people and the sector had the potential to grow at an exceptional rate to become one of the primary drivers of the Indian economy as it is already contributing upto 9 per cent of the GDP and 36 per cent to the total exports.
Meanwhile, President of Apparel Export Association (AEA), Sanjeev Kumar Gupta told KNN, “The textile industry is under a lot of pressure. We are requesting the government to consider our problem and make funds available to SMEs at 7 per cent interest rate per year rather than the higher rate of 14 per cent.”
The industry has demanded a reduction in interest rates to be on par with the farm and agriculture sector which enables them to compete with overseas manufacturers who get funds much cheaper.
“We are urging the government to come up with new policies for MSMEs and particularly the textile sector to help the SME textile sector to grow in the domestic and international markets just like the farm and agriculture sector,” Gupta added.
The textile industry in Punjab is passing through the most tough and difficult phase in recent times. Punjab's textile sector mainly consists of small and medium units with considerable noteworthy textile units consisting of stand-alone spinning and fabric manufacturing units.
The total textile output of Punjab is estimated at Rs 10,500 crore, including Rs 3,250 crore exports of knitwear, shawls, made-ups and yarns. The direct and indirect employment of textile activity in the state is estimated at 2 million people.
The textile industry particularly the spinning units located in Punjab are suffering more because of the higher taxes and levies, higher cotton cost and power shortage," said the AEA President.
Taxes in Punjab are far higher than other states. Further, the state has a location disadvantage; logistic costs are higher considering that Punjab is far from sea ports.
With regard to power, “The Punjab industry is also facing power shortage which has resulted in a slowdown of manufacturing growth besides loss on production. The cost to electricity in Punjab is also higher when compared to neighbouring states like Himachal. The cost of electricity in Himachal and some of the other states is Rs 3.50 per unit while in Punjab it is more than Rs 6 per unit,” Secretary, Knitwear Club / Shawl Club of India, Chiranjeev Singh said, perturbed by higher taxes levied on Punjab industries.
Furthermore, the state has been facing an acute shortage of skilled labours, Chiranjeev added.
Meanwhile, Shawl Club (India) Amritsar, General Secretary, Piara Lal Seth told the media that the textile industry in SME sector was struggling to compete both in global and domestic markets. He too attributed it to the high rate of interest at 14 per cent per annum, charged by banks and financial institutions - the highest in the world.
The high cost of production, he said has particularly affected the export of textiles.
The issue of interest rate for SME Textile sector being at par with the agriculture sector was taken up by the Confederation of Indian Industry and Shawl Club (India), Amritsar during a meeting with RBI in November 2009. At that time, though it was principally agreed by the Ministry of Finance, New Delhi, it was made applicable only to the handloom sector. (KNN)
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