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Punjab textile industry in power trouble
Aug '10
Textile mills in Punjab, which have been badly struck by power crunches, have now started investing outside the state. Where other industrial groups are rejoicing the revival after the economic crunch, the state's textile industry, employing highest number of workers next to agriculture, is still experiencing financial hitches.

Recently, with the hike in electricity duty to 13 percent, Punjab is the second most costly power supplier in the country with each unit costing Rs 5.28, following Gujarat wherein cost of power is Rs 5.65 per unit.

In addition, the recent hike in diesel prices has come like a blow for textile producers, as power makes up for almost eight to ten percent of the yarn manufacturing cost. Currently, Punjab faces sporadic power supply and around 30-40 percent of the power, which is utilized to keep the manufacturing units functional, is captive-generated.

Expansion plans of a number of active players from textile cluster in the state have been undermined on account of unavailability of power. Over the last few years, textile companies based in Punjab have almost made investments worth Rs 50 billion outside the state.

Also, as the hill states were granted tax break in 2003, it was noted that, many of the industries moved to Himachal Pradesh. The key firm amongst these was Ludhiana-based, Vardhman Group, which made investments worth Rs 18 billion in Baddi and Paonta Sahib.

The investments were made towards setting up 245,000 spindles, fabric weaving and finishing units together with 264 modern looms and a yarn and dyeing plant.

Over and above all this, in the last three year's duration, labour costs too have grown by three-folds on account of National Rural Employment Guarantee Scheme. While mills are experiencing acute shortage of power, they are further joined with a rise in electricity duty, which has significantly impacted the production costs and availability of yarn.

Fibre2Fashion News Desk - India

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