Spinning mills go on strike; to cut output to tide over glut situation

It was Black Monday for the textile spinning mills across the country, as they halted production for a day and decided to cut production by a third from tomorrow to tide over their glut situation.

Piling inventories on account of steep decline in demand and price of cotton yarn, coupled with the short-sighted policies of the Government had landed the sector in dire straits, a source said.

The consequent production loss on account of the stoppage is estimated at Rs 250- 270 crore. (There are 3,336 spinning mills in the country and the installed spindleage is 44.6 million, accounting for production of 120 lakh kg of yarn a day).

The daily production loss from May 24 (on account of the cut in production by 33.33 per cent) is estimated at 80 lakh kg, amounting to Rs 90 crore approximately.

Mill sources say that close to 15-20 per cent of the mills are operating only two shifts at present

Various textile association representatives met in New Delhi last week to discuss their plight.

It was at that meeting that they decided to cut production by 33.33 per cent from May 24 and review the situation during the first week of June to chalk out further action.

The Southern India Mills Association (SIMA) Chairman, Mr J. Thulasidharan, said he hoped that with the government support and cutback in production, the industry would be back on the rail soon. The industry associations, under the leadership of the Confederation of Indian Textile Industry (CITI), highlighted the issues to the Textile and Commerce Ministry as also the governments of Andhra Pradesh and Tamil Nadu, Mr Thulasidharan said and blamed the Government for its short-sighted policies on cotton and cotton yarn.

To prevent the crisis from deepening further, the SIMA chief suggested that the drawback facility on export of cotton yarn and DEPB benefits withdrawn in April last be reinstated immediately with retrospective effect.

He also called for withdrawal of the 10.3 per cent excise duty imposed on garment manufacture to perk up consumer demand; provision of 2 per cent interest subvention for all textile and clothing products; a one-year moratorium period for repayment of loans and interest and exemption of this period for TUF eligibility so that NPAs are avoided; conversion of a portion of cash credit (CC) limit into term loans to fill up the gap in the CC limits caused due to sudden fall in the prices of unsold yarn and cotton; and measures to address the pollution issues in various dyeing clusters to trigger yarn sales.

The SIMA chief said that after withdrawal of restrictions from April 1, cotton yarn exports had slackened considerably since non-shipment of Indian cotton yarn for over two months had diverted several regular importers to other sources.

“We understand that exports of cotton yarn during the last five weeks amounted to less than 50 million kg as against 70-75 million kg a month, last year.”

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