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Spinning mills capacity expansion plans on back-burner, NITMA
13
Jan '11
The Northern India Textile Mills Association (NITMA) President, Shri Ashish Bagrodia issued a press statement stated that the Indian Spinning industry has invested more than Rs, 1, 00,000 crores in modernization and expansion in the last 10 years and is today amongst the most modern and efficient within the entire textile value chain and contributes almost 4 bln USD to the foreign exchange earnings of the country.

The Government recently has put a ceiling on the quantity of export of cotton yarn at the behest of the garment exporters who have been crying regarding the increase in cotton yarn prices. The fact of the matter is that the cotton yarn prices have increased in tandem with raw cotton price increases and Indian yarn is still the cheapest yarn in the world, today.

The government has taken a very myopic view on the whole issue and mills have put their capacity expansion plans on the back-burner due to such uncertain and lop-sided policies of the government. He stated that the spinning industry is having sufficient quantities of cotton yarn that are available for the domestic consumption on account of increasing spindleage in the country and that almost 3 million spindles were being added every year.

During the beginning of the current financial year, the Cotton yarn exporters have denied the benefits of 7.67 percent DEPB incentive on cotton Yarn exports and the Duty Drawback on cotton yarn whereas the drawback on apparels and garment sector has been enhanced and as per latest reports the govt. is considering further enhancement.

The Government has put quantitative restriction/ceiling of cotton yarn exports to the tune of 720mn kg. for the current year on the unjustified demands of the garment industry.

Indian cotton yarn is almost 10 percent costlier to other garmenting countries such as China, Bangladesh, Cambodia, Vietnam, etc and still they are able to increase their garment exports but the garment exports from India are falling due to the inefficiencies of the Indian garment sector.

It seems that the Government wants the spinning industry to subsidize the garment industry since there will be surplus yarn in the country and prices will collapse leading to closure of many mills.

The above abrupt and arbitrary policy decision has put lakhs of crores of investment and millions in employment in the spinning industry in jeopardy. The reputation of the Indian spinning industry which controls almost 25% of the world trade in cotton yarn has been dented. It may become very difficult for the spinning industry to win back the loyalty of International customers once we ourselves give them the opportunity to shift to our competitors.

The CYAB constituted by the Textile Ministry to monitor the availability of cotton yarn has become a garment lobby, he stated. The various recommendations made by the cotton yarn manufacturers at the CYAB recently concluded meetinghave not been considered. He stated that there is no shortage of yarn in the country but it is a matter of price as the raw material i.e. cotton prices have been increasing upward for the last couple of months and spinning industry has no other alternative but to increase its cost.

Northern India Textile Mills Association (NITMA)

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