Mumbai, Oct. 3: The Rs 1,175 crore domestic textile machinery industry is seeking a restructuring package that includes improved credit rates from banks and financial institutions and a fund on similar terms as that of the technology upgradation fund.
It wants working capital from lenders at prime lending rates for investments in expansion and modernisation.
Sources say that in view of the tough competition faced by the domestic sector from imports, availability of funds at attractive rates could play a major role in propelling the local industry forward.
This demand for relief from the sector has come at a time when a whiff of optimism is slowly building up in the industry. Many expect demand for machinery to improve with the textile industry fortunes looking up in recent times.
Another factor that is expected to act favourably for the textile machinery sector is the expansion contemplated by many players as they gear up for phasing out of the multi fibre agreement.
The industry has faced a harrowing time over the past few years that saw local demand falling steeply due to a bearish phase in the consuming industry and cheap import substitution, hitting the sector further.
Sources said the duty structure has not provided a level playing field to the industry.
For instance, while the consuming industry can import textile machines, including accessories, at concessional customs duty rate of 5 per cent, the same machines, if produced within the country, are not eligible to obtain similar concessions on imported inputs.
“Therefore, banks should disburse finance at their prime lending rates instead of around 13 per cent that is being given now,” sources told The Telegraph.
The sector is also demanding a fund in excess of Rs 1,000 crore on terms that are similar to that disbursed to the textile industry under the technology upgradation fund scheme.
In 1999, the government announced the technology upgradation fund scheme where a substantial interest incentive was provided on loans availed by textile units from financial institutions and banks.
As per the scheme, effective rate of interest charged to the concerned borrower will be 5 percentage points lower than the prevailing commercial rates of interest charged by the financial institutions and banks concerned.
The ministry of textiles will reimburse the 5 percentage points under the scheme.