Final Report of the Sub-Committee on weak and marginal units, as amended at its meeting on 19th October, 1966.

Summary

This four-page final report, issued by The Indian Cotton Mills’ Federation, records the recommendations of a sub-committee chaired by Shri Naval H. Tata on the problems of weak and marginal cotton-mill units. It distinguishes “uneconomic units,” which require targeted rehabilitation, from marginal units, which need broader measures to prevent further deterioration. For uneconomic mills, the report proposes temporary relief from provident-fund, bonus, and excise-duty payments; labour rationalisation; greater production flexibility; and exemption from retrenchment compensation where the Government takes over and operates a mill. It also recommends expert financial and technical assessment, followed by administrative control involving government, industry, research, financial institutions, previous management, and trade unions.

Key points

• The report distinguishes between uneconomic units and marginal units and calls for separate forms of assistance.
• Uneconomic mills should receive concessions comparable to those available to mills taken over by Government as an unemployment-relief measure.
• An Expert Committee should assess mills’ financial and technical positions and recommend rehabilitation schemes and financial assistance.
• Marginal units require general measures to improve the health of the cotton-mill industry and prevent them from becoming uneconomic.
• The report identifies high excise duties, especially relative to the powerloom sector, as a central cause of the industry’s difficulties.
• It calls for reduced excise duties on yarn, grey cloth, and possibly bleached cloth, as well as reduced differentials between mill and powerloom production.
• It recommends long-term soft loans, tax-law changes to facilitate takeovers, possible distribution of foreign cotton, and a publicity campaign explaining the industry’s difficulties.