Textile mills stopped production today

09 Jul '08

4 min read

Around 4,500 small, medium and large textile mills in the organised sector and SSI sector stopped production at all India level demanding suspension of cotton export till 31st December 2008, zero duty on cotton import, withdrawal of export incentive on cotton, channelising and restricting the quantity of cotton export, reducing the margin money for working capital from 25% to 10% at 7% interest rate on par with agricultural loan.

In addition, the textile mills in Tamil Nadu had demanded from the State Government to ensure uninterrupted power supply, distribute the shortage of power uniformly across the State, reduce the shortage by adopting Pune model and providing suitable fuel subsidy to enable the mills having captive power plant to operate the gensets. The mills in Tamil Nadu had also demanded flexible labour policy.

The Chairmen of all Textile Mills' Associations in Tamil Nadu, in a press release issued, have stated that the Indian textile industry which has been undergoing recession during last two years is now facing severe problem due to the abnormal cotton prices and shortage of power.

Inspite of a record bumper crop of 315 lakh bales during the current season, the domestic industry seriously suffered due to liberal export of cotton, around 100 lakh bales as against 65 lakh bales, the estimate made by Cotton Advisory Board during the beginning of the cotton season. This has depleted the stock-to-use ratio to below 20% as against over 40% maintained by other competing countries like China, thus soaring up of cotton prices.

The Chairmen of all Textile Mills' Associations in Tamil Nadu have further said that though the industry has been pleading from the beginning of the cotton season to take necessary steps so that the second largest employment provider in the country is protected, the Government did not take any step to control cotton prices.

The multinational cotton traders who are able to get unlimited funds at 2 to 3% interest rates hoarded large volume of cotton and speculated the prices resulting in over 45% hike in the price when compared to last year. This has made even the best mills to incur heavy cash losses.

Therefore, they said that all the Associations in the country were compelled to resort to one day stoppage of production on 9th July 2008 to show their unity and solidarity and also send a strong signal to the Government that the problem is extremely serious and acute.

The Chairmen of all Textile Mills' Associations in Tamil Nadu have further said that the one day stoppage of mills has resulted in loss of Rs.500 crores at all India level and Rs.200 crores in Tamil Nadu. They also have stated that the country has 39 million spindles and Tamil Nadu has 19 million spindles. The industry employs around 12 lakh people at all India level and 5 lakh people in Tamil Nadu directly.

The Chairmen of all Textile Mills' Associations in Tamil Nadu have thanked the Central Government for acceding to their pleas and meeting two major demands viz., zero duty on cotton imports and withdrawal of 1% duty drawback (export incentive) offered for export of cotton. They have stated that these two measures would create a level playing field in the globalised environment. They have also stated that the Government would consider other pleas favourably soon.

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