The South India Mills Association (SIMA), which represents spinning mills in southern India, has told the Textile Commissioner that the estimate of exportable surplus of yarn for 2011-12 of 845 million kg, made by the Cotton Yarn Advisory Board, is wrong.
The Association's own estimate is that the country could comfortably afford to export 1,500 million kg in 2011-12 and says the spinners should be allowed to, if they are to get any relief from the twin hits of rising cotton prices and yarn glut in the domestic market.
The basis of difference in estimates of the two bodies lies in their respective projections of demand growth.
Knitting industry
The Board has estimated that the domestic knitting industry would grow 21 per cent and the weaving industry by 30 per cent during the year, but SIMA disagrees.
The Association finds it hard to believe that the knitting industry would grow 21 per cent because about 40 per cent of the units are lying closed, thanks to a High Court order for their closure, on environmental grounds.
Similarly, the weaving industry also would not grow as much as 30 per cent because the powerlooms are facing an acute labour shortage and are also not able to modernise themselves, because of the suspension of the flagship Textile Upgradation Fund scheme (which provided cheap loans for modernisation).
Sima's projections
“It is very dangerous to assume higher yarn requirement for the domestic use as this would seriously affect the highly capital intensive spinning sector,” SIMA's Chairman, Mr J. Thulasidharan, has said in a representation to the Textile Commissioner.
SIMA estimates yarn production of 4,491 million kg for 2011-12, compared with 3,899 million kg in 2010-11.
It projects a demand of 2,900 million kg, leaving 1,500 million kg for exports and 91 million kg of closing inventory.
Even in 2010-11, the government could have comfortably allowed 930 million kg of yarn, leaving a closing stock of 300 million kg for the next year, Mr Thulasidharan said in the note.