New Delhi: The textile industry has pitched for a one-time loan restructuring, citing a 25-50% drop in overall demand in FY21 due to the Covid-19 pandemic. The Confederation of Indian Textile Industry has written to Reserve Bank of India governor Shaktikanta Das, saying 25% of the textile mills and garment units might witness permanent closure in the current situation, throwing several lakhs of people out of jobs.
“Impact of Covid-19 has broken the back of the textile industry as it is a low-margin, capital-intensive industry,” it said in a letter seen by ET. Presently, the industry is under great financial stress due to heavy losses suffered since the onset of Covid-19, it said.
The plea comes in the backdrop of the banking sector making a strong case for such one-time loan restructuring, apprehensive of a rise in non-performing assets due to Covid-19-induced stress.
Some policymakers have also backed the restructuring scheme for sectors worst hit by the pandemic, including hospitality, tourism, aviation and construction. CITI lamented that textiles was not part of this list. The size of India’s textile and clothing industry was estimated at $162 billion in FY19, including about $37 billion in exports.
The industry has the potential to reach $350 billion including $125 billion in exports and create additional jobs for 30 million people by 2024-25, according to CITI. As per the letter, the textile industry has struggled for more than three years and is likely to shrink for the next two years.