Expansion and modernisation plans of several small-scale Indian spinning units seem to have gone awry. Making huge investments for capacity building and for developing a robust infrastructure has become unviable for small textile firms as they continue to grapple with lower earnings and plunging volumes.

The economic slowdown coupled with substantial revision in the Minimum Support Price (MSP) of cotton have also put the small spinning mills’ finances in jeopardy, thereby making it difficult for them to proceed with their growth plans.

Deferring expansion

As a result of the recessionary pressures, the modernisation and technological upgradation plans of several SME textile firms has hit a snag. Implementation of the Technology Upgradation Fund Scheme (TUFS), the flagship scheme of the Ministry of Textiles, has also been put on hold by the cash-starved small spinning mills.

“Extension of subsidy under the TUFS by the government holds little significance at a time when most textile mills are finding it difficult to even stay afloat. Given the prevailing challenging trading conditions and macro-economic environment, expansion or modernisation plans ranks lowest in the priority list of small-scale textile mills,” said N Maheshwari, Proprietor of Ambika Synthetic Mills, a small-sized spinning and knitting loom in Kolhapur.

The crisis-ridden textile industry is also seeking a redressal of their grievances pertaining to issues such as inadequate bank lending support, shortage of manpower and frequent power cuts before undertaking expansion plans.

“The TUFS was introduced to make the Indian Textiles sector competitive in both domestic and international markets. However, under the current circumstances, the government needs to first address the existing problems hampering the growth of the sector and then focus on market schemes,” said Prakash Bhatia, Proprietor of JainCO Mills, a small-sized supplier of fibres in Kolkata.

Going by the market conditions, the incremental demand for technological upgradation schemes is set to go down in the coming months. However, once the fundamental problems are resolved, small spinning mills are likely to undertake major expansion plans and also focus on availing the benefits of government-initiated upgradation schemes.