Recently, around seven mills stopped their entire manufacturing activity and three mills are almost on the verge of closure, according to a letter sent to Maharashtra government by the mill owners' association.

It also says that the closure has resulted in the unemployment of nearly 18,000 workers.

While the textile industry's organised sector is reeling under cost escalation, Mumbai mills have to contend with extra cost burden arising from locational disadvantage, says the letter.

There is no neutralisation for additional cost disability at the market place which is flooded with cheaper fabrics supplied by powerlooms, says the letter.

Most of the mills have been caught in a financial trap. There are large scale defaults on payment of interest and repayments. The cash credit and bill discounting facilities are also stagnant,despite the pressing need for larger bank credit, says the letter.

The mills are hiring warehouses as the stocks of cloth are rising continuously and the time lag for payment to sundry creditors has extended beyond nine months, says the letter.

Higher water and sewerage charges are also posing problems for the industry. The water and sewerage charges are at Rs 330 per 10,000 litre, which is considered to be the highest in the world.

Mumbai's cotton mill industry consumes about 10 lakh kilo litres of water per month on which the burden of water charges come to around Rs 39.60 crore per annum at the present rate.

Although the textile minister has taken initiative to persuade banks to be liberal with mills, the association is apprehensive of change in the attitude of the banks.