For the first time in the last 20 years, there has been a 28 percent decline in yarn and textile exports, the South India Spinners Association said. The spokesperson said that spinning mills in Gujarat can wait for one more month for yarn prices to rise and if not, the production in the western state will also fall by 15-20 per cent. Industry in Tamil Nadu and Gujarat has been demanding reduction in import duty, consolidation policy and more emergency loans to overcome the current crisis.
Come Saturday (July 15), spinning mills across Tamil Nadu will stop production and sale of yarn. A meeting of MSME Spinning Mills Associations held in Coimbatore unanimously decided to suspend the spinning industry due to heavy losses. MSME is an acronym used for Micro, Medium and Small Enterprises.
“For the first time in the last 20 years, yarn and textile exports have declined by about 28 per cent,” claimed a spokesperson of the South India Spinners’ Association.
Cotton prices remain high (but well above last year’s levels), but have been offset by increased import duties from 2021. Due to the 11 percent import duty on cotton, domestic cotton prices are 15 percent higher. As a result, India has lost many international orders and is unable to compete with neighboring countries in exports of yarn, fabric and apparel,” said a spokesperson of the association.
The association added that the entire textile value chain is affected by unregulated imports of yarn and fabrics from countries like China, Vietnam and Bangladesh.
A mill in Tamil Nadu produces 2500 kg of yarn per day and incurs a loss of Rs 1 lakh per day.
40’s yarn is priced at Rs 235 per kg, depending on how fine it is. For example, 40-gauge yarn is finer than 20-gauge yarn. Clean cotton is priced at Rs 194 per kg. That means, a kilo of cotton converted into yarn by the spinning mill is only Rs. According to the South Indian Textile Research Association, this is half of what the mill needs to survive.
According to the Coimbatore-based India Spinning Mill Owners Association, “Mills are at a standstill as they are forced to incur huge losses as they are unable to meet the expenses of bank loan repayments (principal and interest), cotton purchase payments, electricity bills etc. The body believes that if the situation continues, the mills will have to be shut down permanently.
Similar fears are evident in Gujarat, another major center of India’s cotton industry. “We are monitoring the situation. Considering we are working on an innovative sales model, there is no need to reduce production at present,” Ripple Patel, vice president of Gujarat Spinners Association told CNBC-TV18. The cushion Gujarat spinners have against their Tamil Nadu peers is that they work 35 days in advance.
Even mills in Gujarat will have to cut production by 15-20 percent if yarn prices do not rise before August 16, says Patel. “Different regulatory norms are hurting the Indian textile industry,” he added.
Industry in Tamil Nadu and Gujarat has been demanding reduction in import duty, consolidation policy and more emergency loans to overcome the current crisis. Spinning mills in Tamil Nadu also demanded a reduction in power rates, which increased production costs by 6 percent.
First Published: July 14, 2023 2:49 PM IST