T.N. CM urges PM to withdraw import duty on cotton and restructure credit scheme to help struggling spinning mills

Tamil Nadu CM Stalin appeals to PM Modi to withdraw 11% import duty on cotton, restructure ECLGS & temporarily ban export of waste cotton to help struggling spinning industry. Requested to extend moratorium on loan repayment, reduce interest rates & extend cash credit limits.

Tamil Nadu Chief Minister M.K. Stalin on Wednesday appealed to Prime Minister Narendra Modi to withdraw the 11% import duty on cotton, restructure the Emergency Credit Line Guarantee Scheme (ECLGS), and temporarily ban the export of waste cotton to help the spinning industry, which is struggling due to a steep increase in cotton prices.

In a letter to the Prime Minister, Mr. Stalin said the increase in the price of cotton and its impact on the cost of yarn and fabrics has affected the spinning sector in Tamil Nadu which has around 1,500 mills, and 15 lakh employees.

The CM pointed out that the spinning mills’ association in the State had declared a stoppage in production since July 15 due to the crisis the sector was facing due to high cotton prices, increased operational costs, increases in bank interest rates and poor demand in domestic and international markets.

Besides, the repayment of short-term loans, provided under ECLGS to help micro, small and medium enterprises (MSME) post the COVID-19 pandemic, has commenced now, placing an additional burden upon the spinning mills. The Union government should extend the moratorium on the repayment of these loans by another year, the CM said. He further appealed to the government to consider restructuring the existing loans to six-year term loans while providing fresh loans at reduced interest rates.

Recalling the letter he wrote to the PM in May 2022, Mr. Stalin reiterated his earlier request to extend the time of cash credit limits of spinning mills for purchasing cotton from three months to eight months and reduce the margin sought by the banks to 10% of the purchase value.

Arguing that a significant price differentiator between India and its international competitors was the 11% import duty on cotton, he requested the Union government to withdraw this as it would help in significant reduction of production costs.

Mr. Stalin further requested the Prime Minister to consider a temporary ban on the export of waste cotton to address its shortage being faced by open-end spinners, who came under micro enterprises and accounted for 35% of the yarn production in the country.