NPA cloud looms over textile backbone, spinners demand parity with apparel relief

The financial health of India’s textile value chain is under severe strain, with capital-intensive spinning and weaving units (HS Codes 52-60) facing an imminent Non-Performing Asset (NPA) crisis. The Southern India Mills’ Association (SIMA) has issued an urgent appeal to the RBI, demanding the extension of recent trade relief measures, currently limited to finished garments and made-ups (HS Codes 61-63) to these foundational raw material segments. Data confirms deep distress, showing a recent 11.66 per cent slump in cotton yarn and fabric exports and an alarming 82 per cent of firms being forced to extend credit cycles up to six months due to liquidity crunch.

The siloed relief creates a critical financial fault line, risking the entire domestic Textile & apparel market, valued at almost $184 billion in 2024-25. These spinning units grapple with chronic overcapacity, volatile cotton prices, and soaring power costs, leading to production disruptions ranging from 25 to 70 per cent in decentralized units. SIMA Chairman Durai Palanisamy warns that if the four-month moratorium on term loan and working capital interest, granted to the apparel sector is not immediately extended upstream, the resultant NPA wave will destabilize raw material costs for major vertical retailers like the athleisure sector.

Meanwhile, while the government has prioritized long-term structural change through schemes like the PM MITRA Park scheme and the newly launched Rs 600 crore Cotton Mission the industry requires immediate fiscal cushioning. By granting the moratorium and extended credit periods to HS Codes 52-60, policymakers can prevent the foundational textile segment essential for India's target of $100 billion in T&A exports by 2030 from being crippled by short-term global trade headwinds and import competition.