Diesel price hike a shock to Southern India textile sector

14 Sep '12

5 min read

The Indian textile industry, the single largest employment provider, employing over 91 million people particularly the rural masses and women and the backbone of country's economy has been passing through a worst crisis in its history during last two years owing to high volatility in the raw material prices.

Tamil Nadu is the worst affected State which accounts for over one third of the textile business in the country, directly employing over 50 lakh people, fetching over Rs.50,000 crores forex earnings and accounting for 47% of the yarn production capacity of the country due to added problems like acute power shortage for past four years and high transportation cost. The State has to procure over 95% of its raw material particularly cotton from States like Gujarat and Maharashtra by spending around Rs.5 per kg as the lorry freight and again spend the same amount to sell it produce in the upcountry particularly the power loom centres in Maharashtra.

Andhra Pradesh has also joined the wagon for the past one year due to severe power shortage. The Southern grid corridor bottleneck does not allow the Southern States to mitigate the power crisis taking advantage of the open access power purchase system. Realizing the grave situation of the textile industry, the Centre announced a financial restructuring package of Rs.35,000 crores 29th May 2012 to avoid further sickness in the textile industry.

In a press release, Mr S Dinakaran, Chairman, The Southern India Mills Association, the largest employers' organization representing the textile industry in the country has stated that the diesel price hike of Rs.5 per litre at one stroke has come as a rude shock to the ailing textile industry.

He has stated that Tamil Nadu textile industry is facing over 50 percent power shortage and once wind season is over the situation would worsen from October onwards. He added that the State has a generation capacity of only around 7,000 MW as against the peak demand of over 12,500 MW and is relying only on diesel power generation to sustain the survival of the industry in the State. He has said that the investment in the textile industry has become dormant during the last three years and over 20 lakh people employed in the textile industry lost their jobs owing to power shortage.

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