Mumbai: The textile sector accounts for nearly a third of the Rs15,000 crore of corporate debt restructuring initiated by Indian companies since April 2008, illustrating the tough times the industry is passing through, according to people familiar with the situation.
The amount of loans under restructuring by textile companies has doubled from Rs2,300 crore in December to Rs4,600 crore in April, the people said. State Bank of India and ICICI Bank Ltd, the nation’s two largest lenders, have the largest exposure to these loans.
The profitability of the $50 billion (Rs2.37 trillion) textile sector, which employs 30 million workers, has been severely eroded and exports have declined by as much as 25% because of the global economic downturn.
With exports continuing to decline, and other price-competitive countries eating into their global market share, textile companies are hoping the government will come to their aid soon with a stimulus package.