The Indian government should take urgent measures to defuse the “grave crisis” afflicting the country’s textile sector, according to the Confederation of Indian Textile Industry (CITI).

CITI chairman Shishir Jaipuria said the cotton yarn sector alone had suffered estimated losses of INR110bn (US$2.5bn), thanks to an “unprecedented rough trajectory” marked by yarn price crashes, demand erosion, the withdrawal of export incentives, new taxes and “arbitrary” restrictions on yarn exports.

This would lead to the closure of a number of units “in a matter of months”, CITI said, unless the government announced a relief package.

The package should include the immediate restoration and backdating of DEPB and a drawback on yarn exports, said Jaipuria, as well as the restoration of interest subvention of 4.5% on textiles and clothing exports.

The 10% excise duty imposed on branded garments and clothing in the last Budget should be removed, he added, alongside a moratorium of an additional two years on the repayment of all loans and interest, including TUFS loans, for all textiles and clothing units.

CITI’s call for action follows a period of marked price volatility in domestic cotton prices, which soared from INR30,000 per candy last September to INR63,000 in February/March this year, before crashing to INR45,000 in April and to INR38,000 by the end of June.