Speaking on the plight of the industry, Deepak Parikh, the outgoing chairman, Indian Cotton Mills Federation, said the situation aggravated since the beginning of the year with a substantial reduction in the offtake of cotton yarn by the South-east Asian countries, which are reeling under a currency crisis.

The industry is going through one of its worst crises with as many as 257 mills closing down by July this year.

Parikh said that the credit institutions perceive the textiles sector as a high risk industry. He urged banks and financial institutions to take a sympathetic view of needs of textile units.

The strident increase in capacity of spun and filament yarns and fabrics in the recent years have created an over-supply situation. ICMF chairman suggested the scrapping of non-viable units as was done in countries like UK, Japan, West Germany, Spain and China.

"Lower wages, cheaper power, minimaloverheads and virtual immunity to labour laws led to the burgeoning of powerloom sector in these countries, he explained.

The stiff consumer resistance encountered by the textile units necessitates reduction in the duty burden to a three tier excise at 8, 13, 18 per cent.

Parikh also cautioned against the rising imports of textiles from China, Nepal, Hong Kong, South Korea and Bangladesh and reiterated ICMF's suggestion of collection of import duty on the basis of ad valorem or specific rates whichever is higher.

In context of intense competition unleashed by globalisation, phasing out of quota under MFA, progressive liberalisation of market access, and gradual lowering of import tariff, the chairman emphasised the urgent need for activation of Technology Upgradation Fund.