Stalin writes to PM Modi seeking relief for beleaguered textile industry

M K Stalin says several units staring at closure, urges mandatory declaration of cotton and yarn stock, easier cash credit limits for mills to buy cotton

Tamil Nadu chief minister M K Stalin has written to Prime Minister Narendra Modi seeking relief for the textile industry, which is battling high cotton and yarn prices. Asserting that several units were on the verge of closure, Stalin called for mandatory declaration of cotton and yarn stock, and easier cash credit limits for spinning mills to buy cotton, among others things.  

Union textile minister Piyush Goyal has called a meeting of all stakeholders on May 17, to discuss rising input prices. Following requests from various stakeholders, the Centre had notified the withdrawal of import duty on cotton.  Despite this, the situation has not improved and prices of cotton and yarn continue to rise.

“This precarious situation has widespread ramifications for the textile industry in Tamil Nadu. A large number of spinning, weaving and garment units face closure due to unsustainable demands on their working capital and price mismatch between the agreed price of supply to the buyer vis-a-vis the cost of production,” Stalin said.

He added that the garment manufacturers are suffering huge losses and many MSME units have already shut down, causing massive job losses in a sector traditionally regarded as an employment generator. “The situation has also had an adverse impact on handloom weavers in the cooperative sector as they are not able to procure yarn and supply the same to their members for the weaving of cloth,” the CM added.

Immediate measures that the state is putting forward include making stock declaration for cotton and yarn mandatory for all spinning mills so that ginners and cotton traders can obtain actual data on their availability. The Centre has waived import duty on cotton till September 30 this year. Interestingly, it takes more than three months for the consignment to reach Indian ports after the contract is signed, effectively making import duty waiver available only up to June 30. Hence, the state wants an issue of clarifications that waiver of import duty will be available for all contracts signed on or before September 30.

Stalin also wants relief on the cash credit limit front. At present, banks provide spinning mills cash credit for buying cotton only for three months, even though the commodity is available with farmers for four months and beyond. “Hence, the cash credit limit of the spinning mills to purchase cotton may be extended up to eight months in a year. Similarly, margin money sought by banks at 25 per cent of purchase value may be reduced to 10 per cent, since banks are calculating the purchase stock value at rates lower than the actual purchase/market rates in the market,” Stalin said in his letter.

“The growing discontent in the  industry and among weavers is  alarming. I, therefore, request you to take serious note of the situation and initiate the steps to rein in the price rise and consequent disruptions in the textile value chain,” he said.