MP to lose Rs 500 cr in exports

Madhya Pradesh's exports out of its export-related textile units are likely to be down by at least Rs 500 crore this year.

The state has 12 export-oriented units, and except for Mandideep-based Anant Spinning Mills, none has expanded business despite there being potential in markets like Malaysia, China, and other Southeast Asian countries.

There are 40 non-SSI units in the state and 20 composite mills with a capacity of 1,414,000 spindles.

According to figures of the Madhya Pradesh Textiles Mill Association, the state exported yarn, fabric, and knitted garments worth Rs 1017.55 crore during 2000-01, which dwindled to Rs 991.36 crore during the year 2001-02. Exports were Rs 1162.82 crore in 1999-2000.

The situation is so bad that millers (except for a few) do not want to complain. "The officials will harass us if anything comes in black and white," said a miller on conditions of anonymity.

In view of high power costs, harassment from officials of the MP State Electricity Board, and the weight and measure department, irrelevant clauses of MP Industrial Relations Act, mandatory duty and cess on captive power generation, the existing units have put their expansion plans on hold.

"Had I been given permission to set up a power plant, I would have added 50,000 spindles to my unit in Mandideep," said MS Tyagi, executive director of Nahar Spinning Mills.

Nahar Spinning Mills has two units in Mandideep with a capacity of 67,000 spindles with a 16 MW captive power capacity. Its turnover is touching Rs 172 crore, Rs 120 crore being for exports. The company had acquired a land area of 42 acres to set up new spindles, but the plan is on the backburner.

The Madhya Pradesh government charges 31 paise per unit on captive power, which is very high in comparison to 25 paisa in Rajasthan and 12 paise in Kerala.

The MP government levies it in terms of percentage. At present, the rate is 8 per cent for spinning units, 6 per cent for registered power looms and 5 per cent for other textile units.

Moreover, cotton ginning and pressing are seasonal activities but the MPSEB charges minimum power tariff even if the units remain closed for months due to non-availability of cotton during a year.

A cross section of MP Textiles Unions names only one top official RS Julania who had been posted on MPSEB by the Digvijay Singh government, put the local textile units in trouble by reportedly not granting them permission deliberately.

"I applied for setting up a separate power plant to meet my power needs but Government did not give me the permission. The board officials came to me and advised me to set up a power plant but later they refused. I do not know what had happened," said Mr Tyagi, who is also vice chairman of MP Textile Mills Association adding, "State govenrment's attitude would cost at least Rs 500 crore in terms of export this year,"

"I also made several futile attempts to convince the then chief minister Mr Digvijay Singh about importance of captive power plants to our unit," he said.

The textile millers use furnace oil to generate captive power. The state has only one depot in Manglya near Indore for its supply. Further the weight and measures department impose a non-written rule on the units to calibrate furnace oil tanks, which are not the part of textile units.

"According to law book the calibration is only applicable on furnished products," said a member of the association adding, "It is only a way to grease their (Weight and Measure departments officials) palms."

Tax on furnace oil is still higher in the state despite it has been brought down from 20 percent to 6% percent. "It should be 3%," the textile unit Association have already demanded from the state government. In absence of bound resource there is no duty free oil available for export oriented units, said Association members.

"Government must remove power cess and duty which is 51 paise per unit at present. None wants to go away from its existing units but government should come up with a solution to this problem," said Pankaj Jajoo, managing director of Dhar Textile Mills Ltd.

Further state government's definition is different on exemption from commercial tax to certain eligible units. According to MP government definition only those units are eligible which are exporting 75% of its product in terms of value addition.

"According to the provisions of the Exim Policy, an EOU is allowed to sell 50% of the value of exports in the domestic market," a textile exporter complains.

Similarly cotton yarn attracts 8% commercial tax in MP, which was 3% till 2000, and the rate of commercial tax on yarns sold for domestic consumption in the state has been raised from 2% to 4%. Unlike other states, Madhya Pradesh imposes an entry tax of 1% in the cotton.

Cotton contamination is another big problem for these units despite MP grows superior quality H4 cotton. "It becomes the fourth most contaminated cotton in the world. There is no seed certification institute for cotton and it gets homogenized at different depots," said Mr Tyagi.

The first industrial textile unit (a cotton unit) was set up in 1866. It was named as State Mill and was established by the then Maharaja Holkar at Indore. Later a number of textiles unit came up in Rajnandgaon, Bhopal, Gwalior and Burhanpur.

Pre-Independence there were 18 units in Madhya Pradesh. Of them 16 were composite mills and 2 were spinning mills. The aggregate installed capacity of these units were 13000 looms and 4,56,000 spindles.