 "cotton yarn, cotton, textile, clothes")
Suffering from heavy losses, spinning mills in Tamil Nadu have decided to stop production and sale of yarn starting from Saturday (July 15), a meeting of the MSME Spinning Mills Associations' decided on Thursday.
The state has around 2,032 spinning mills, out of the total 3,542 mills in India. The Spinning Industry in Tamil Nadu has been facing unprecedented losses for several months. For the first time in the last 20 years, exports of yarn and textiles have declined by around 28 per cent.
To tide over the crisis, the mills are demanding the Government of India to immediately withdraw the 11 per cent import duty imposed on Cotton. Due to 11 per cent import duty on cotton, the price of domestic cotton is 15 per cent higher. As a result, India has lost many international orders and is unable to compete with neighbouring countries in the export of yarn, fabric and clothing.
The industry bodies also requested the government to immediately reduce the interest rates of the banks to the previous level of 7.5 per cent. Over the past several months, banks' interest rates have gradually increased from 7.5 per cent to 11 per cent. As a result, the cost of yarn production has increased from Rs.5 to Rs.6 per kg.
“We request that the outstanding short-term loan of 'Emergency Credit Line Guarantee Scheme (ECLGS) be restructured and provide fresh ECLGS loan as given earlier. Provide a six months holiday period and seven years repayment period at a lower rate of interest,” it said. Considering the slowdown in the Spinning Industry, it also asked the government of India to extend the term loan by two years moratorium and restructure the existing term loan as given in the past.
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“The Minimum Support Price (MSP) operation has to be extended to Cotton Yarn. The MSP has to be fixed at atleast Rs. 2.25 Paisa per count per kg,” it added. Tamil Nadu Generation and Distribution Corporation (TANGEDCO) increased power tariff too and the production cost of spinning mills has gone up by Rs. 6.
At present, the price of cotton per candy (356 kg) comes to around Rs 58,000. The price of 40’s yarn is Rs. 235 per kg. “As per guidelines of South Indian Textile Research Association (SITRA), the minimum conversion cost of cotton to yarn should be Rs 2 per kg. In today's situation, the conversion cost from Cotton to Yarn is only Rs 1. So Spinning Mills incur a loss of Rs 40 per kg. A mill having about 10,000 Spindles would produce 2,500 kg of yarn per day, which is incurring a loss of Rs 1,00,000 per day,” a statement by the associations said.
As the mills are forced to incur huge losses, unable to meet the expenses of bank loan repayment (principal and interest), cotton purchase payments, electricity bills, GST etc, the mills are at a standstill situation. If this situation continues, the spinning mills will soon become Non-Performing Assets (NPA) and the mills will be at risk of permanent closure.
