The Hindu Business Line : Centre concedes two major demands of spinning mills

Coimbatore, July 9 Close to 4,500 small, medium and large spinning mills across the country downed their shutters today to press their demands including a ban on export of cotton till the end of the year and regulating the trading in cotton by multinational agencies.

However, the industry associations have decided not to precipitate the issue further by going for an indefinite strike with the Union Government conceding some of their demands.

The chairmen of six textile mills associations in Tamil Nadu that had called for the work stoppage, in a press release issued here today, said the textile mills have been grappling with abnormal increase in cotton prices and shortage of power.

In spite of a bumper crop of 315 lakh bales during the current season, the mills were hit by the liberal export of cotton of around 100 lakh bales as against 65 lakh bales, the estimate made by Cotton Advisory Board during the beginning of the cotton season.

This had depleted the stock-to-use ratio to below 20 per cent as against over 40 per cent maintained by other competing countries like China, leading to spike in cotton prices by about 45 per cent.

The industry argued that while the multinational cotton traders were able to get funds at 2 to 3 per cent interest, the mills were hamstrung by the abnormal interest rates of 14-15 per cent charged by the Indian financial institutions. They also faced constraints in getting finance to meet their working capital requirements.

The high financial costs prevented the mills from stocking their cotton requirement for the entire year and were forced to hold stocks only for a few months, leaving them vulnerable to fluctuations in cotton prices. They wanted the Centre to come to the rescue of the industry by ensuring that mills were extended finance on easier terms.

The associations estimated that the one-day stoppage of work had resulted in loss of production of Rs 500 crore at the national level and Rs 200 crore worth production loss in Tamil Nadu.

The association leaders thanked the Union Government for acceding to two major demands viz., zero duty on cotton imports and withdrawal of 1 per cent duty drawback (export incentive) offered for export of cotton.

More Stories on : Textiles | Tamil Nadu

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