The Hindu Business Line : Spinners oppose export incentive for cotton

Coimbatore, May 16 The small scale spinning industry has criticised the unbridled export of raw cotton allowed from the country at the cost of the domestic spinning sector.

The mounting export has reduced the availability of raw cotton for the domestic spinning industry impairing its raw material sourcing, the South India Small Spinners Association (Sisspa) has said.

As against 30 lakh bales of cotton exported during 2006-07, the export in the current year is poised to touch 100 lakh bales.

Sisspa apprehended that while most of the cotton exported had landed in countries competing with India in the international market, the incentives offered by the Government on cotton exports did not reach the growers and they were being cornered by middlemen and the cotton trade.

The association asked the Government to halt the cotton exports and take stock of the situation to ensure that local industry’s cotton requirement is met.

Scarcity of wastes

The situation is no better in the case of waste cotton — the scarcity of which, on account of its free export, had deprived the open-end spinning mills of their raw material.

Sisspa regretted that mills planning to import cotton are heavily burdened by the 15 per cent customs duty.

The Centre had reduced the tax on inter-State sales from 3 per cent to 2 per cent for 2008-09 but this reduction is yet to come into effect, thereby denying benefits to mills buying cotton from other States.

Input costs up

As for the cotton yarn, the spurt in input costs and fall in sales realisation due to the depreciating dollar value have turned the yarn market un-remunerative.

The association wanted the Centre to incentivise yarn exports till the domestic market sales improved. When there is no sign of any recovery in the textile market, the spinning units are faced with cash crunch and the sharp increase in the interest charge on their bank borrowals following the tight money supply measures initiated recently by the RBI made matters worse for them, Sisspa said.

The restricted power supply situation in Tamil Nadu has forced the textile industry in the State to scale down their operation affecting its production by up to 30 per cent and to offset the production lost, the industry should be given electricity tariff concession for at least for the period of power shutdown, Sisspa said and asked the State electricity board to raise the interest rate payable on the additional security deposit on energy consumption collected from the industry.

More Stories on : Textiles | Cotton | Exports & Imports | Tamil Nadu

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