Spinning mills from Tamil Nadu, Andhra Pradesh and Telangana that account around 55% of the spinning capacity in the country have appealed to the central and state government for relief measures to overcome the financial impact of global recession and sluggish demand in the domestic markets.
“The 11% import duty levied on cotton and the expensive man-made fibre and filament yarns added fuel to the situation and drastically reduced the exports of yarns, fabrics, garments and made-ups,” said South Indian Mills Association (SIMA) in a release.
It added: “The steep increase in the power cost ranging from Rs 1 per unit up to Rs.2.50 per unit greatly affected not only the global competitiveness but also in the domestic market when compared to Maharashtra, Gujarat and Madhya Pradesh that offer huge incentives under their new state textile policies.”
According to SIMA, the high volatility in cotton and yarn prices and the new capacities added in the aforesaid states and drop in exports have made the production capacity surplus and affecting the existing production capacities in the southern states.
The Ministry of Textiles had recommended extending one year moratorium for the repayment of loans and extending adequate financial measures on a case-to-case basis based on the representations made by the spinning sector in across the country.
“Under these circumstances, the long-drawn Ukraine-Russia war, recent Israel-Hamas war and the MMF QCO related issues caused severe financial stress in several countries and further reduced the demands for all the spinning mills across the country,” the release stated.
Dr. S. K. Sundararaman, Chairman, SIMA has said that many associations representing spinning mills and open-endspinning mills was held to discuss and decide the strategies for mitigating the unprecedented crisis.
“We have jointly appealed to the Chief Ministers of Tamil Nadu, Andhra Pradesh and Telangana to roll back the power tariff hike brought in the recent years for a period of one year. We have also appealed the state governments to exempt third party power and IEX power purchase from cross subsidy surcharge and additional surcharge”
“Import surge across the value chain at an abnormal degree, more specifically fabrics, garments and made ups from China, Bangladesh, Vietnam and Sri Lanka is dampening the core Schemes implemented by the Central Government to promote indigenous-quality manufacturing, in addition to paving way for achieving the targeted US $ 350 billion textile business size (US $ 250 billion domestic market and US $ 100 billion export market),” said SIMA.
According to SIMA, there has been an increase in import to the tune of 40% cotton fibre, 149% viscose fibre, cotton yarn 442%, polyester yarn 46%, viscose yarn 204%, polyester fabrics 46%, garment 44%, made-ups 27% respectively.
Dr. Sundararaman said that the spinning mills’ associations have appealed the Hon’ble Prime Minister to extend the one-year moratorium for repayment of the principal loan amount; convert three-year loans under ECLGS into six-year term loans; extend necessary financial assistance to mitigate the stress on working capital, on a case-to-case basis; remove 11% import duty on cotton and address the QCO related issues like exemption for fibre/filament yarns TT that are not manufactured in India, exemption of raw materials imported through advance authorization scheme, provide adequate testing facilities and reduce BIPS certification and testing charges, etc.
