Spinning mills have decided to cut production by a third from Tuesday.
Led by the Confederation of Indian Textile Industry (Citi), the move was announced on Wednesday in a meeting with all the major textile associations in New Delhi.
To begin with, spinning mills will remain closed for a day on Monday, said Shishir Jaipuria, chairman, CITI at a press briefing in New Delhi.
“A combined representation has already been sent to the textile minister, commerce minister and senior officials in the ministries, highlighting the current problems. The short-sighted government policies with reference to both cotton and cotton yarn in the recent past have converted a profitable spinning industry into a crisis-ridden sector during the last few weeks,” said Jaipuria.
The sagging demand for cotton yarn has forced mills for a production cut of 33.33 per cent (1/3rd) of the existing daily production. It was also decided that a review meeting of all the stakeholders would be called in the first week of June to take stock of the price and demand position and decide further action.
Mentioning that textile mills were holding a stock of 500 mln kg, Jaipuria said this had completely eaten into their working capital.
"Faced with cash losses and negligible working capital, mills are finding it impossible to buy cotton and this has resulted in a decline in cotton prices in the market. However, the decline in cotton prices is no indication of adequate availability."
Leaders of various associations have sought several "urgent steps" to prevent the current crisis from deepening. According to Jaipuria, steps such as reinstatement of drawback facility on cotton yarn exports, withdrawal of excise duty of 10.30 per cent on garments, providing two per cent interest subvention for all textile and clothing products, and providing one year’s moratorium for repayment of loans to spinning mills, among other things need to be taken by the government.
