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Govt focus required to stabilise textile industry
Mar '10
With cotton prices once again going up, a continuous marginal hike has been noted in the prices of yarn which has led to a fall in demand, but a weaker rupee has helped stimulate the exports.

Also a new notification has been issued, according to which the export limit for cotton yarn has been further reduced from 50 million kgs to 35 million kgs per month, for next four months.

As laid down in the notification, previous exemptions in respect of yarn products like lycra, dyed, heather grey or mÈlange, slub or bleached or singed have also been done away with, by deleting the same from previous notification that was issued on January 14, 2010.

Also henceforth only the registered units will be able to export the value-added yarn which fetches price of $3.5 per kg or more, in excess of quota.

In spite of the problems, about 50 textile groups still have optimistic and wider business prospects. But on the other side it has proved to be a losing proposition for many of the industrialists. Thus, many of them have either closed down or are on the verge of doing so.

A hike in the prices of yarn was noted subsequent to the export ban, and the fresh notification capping yarn export at 35 million kgs from 50 million kgs per month may lead to a further hike in prices.

Local markets are experiencing dearth of yarn owing to a sharp fall in production, as due to reasons like insufficient power and gas supply the spinners are functioning at two-third of their capacity. Moreover, there has been a sharp increase in the cost as the value-added sector was making use of furnace oil or diesel to generate electricity.

A value-added producer observed that his monthly gas bill averaged Rs 10 million, but because of the switch from gas to furnace oil the cost had increased to Rs 30 million.

If government comprehensively addresses the industry, then that may turn out to be the best solution for dealing with all the problems that are being faced by the textile industry. A reliable infrastructure needs to be developed for the industry by the government, at the earliest.

Fibre2fashion News Desk - India

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