The Centre's hasty decision to allow export of 20 lakh bales (of 170 kg each) of cotton more will lead to closure of textile mills, said the Chairman of the Southern India Mills' Association, Mr S. Dinakaran. Shortage of quality produce during the end and beginning of the season will hit mills, he said.

He said, “Even at this juncture, the industry is in deep trouble. Cotton prices turned highly volatile last year mainly because of the huge export volumes; 55 lakh bales were exported in 45 days.

“This coupled with the acute shortage of power in Tamil Nadu affected the operations of the spinning sector severely.

“The industry has been pleading for a debt-restructuring package: a two-year moratorium in repayment of principal amount with repeated restructuring facility and conversion of eroded working capital into a five-year term loan.

“Due to the undue delay in announcing the restructuring package, mills lost the wherewithal to procure the required cotton for the season.”

In these circumstances, the Empowered Group of Ministers, formed under the chairmanship of the Union Finance Minister, Mr Pranab Mukherjee, decided to maintain at least 50 lakh bales as closing stock during the 2010-11 season.

Already around 115 lakh bales has been allowed for export during the current cotton season as against the Cotton Advisory Board's decision of 84 lakh bales, leaving a closing stock of 25 lakh bales.

The working capacity of the mills in the State is expected to improve from May due to improved power supply, thanks to wind power. Subsequently, monthly cotton requirement is also expected to go up to 23 lakh bales as against the current level of 20 lakh bales.

The decision to export another 20 lakh bales will only spell disaster for the mill sector, said Mr Dinakaran.

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