Spinning mills in Coimbatore are facing a serious problem as a result of industry groups’ decision to halt yarn production and sales as of July 15 due to significant losses they have suffered. This was determined during an MSME Spinning Mills Associations emergency meeting on Wednesday.
For the first time in the last 20 years, yarn and textile exports have decreased by about 28%. According to a joint statement released by S Jagadesh Chandran, Hony Secretary, South India Spinners Association (SISPA), and G Subramaniam, President, India Spinning Mill Owners Association (ISMA), both based in Coimbatore, the price of cotton per candy (356 kg) is currently 58,000; the price of 40’s yarn is 235 per kg; and the cost of clean cotton is 194 per kg.
According to South Indian Textile Research Association rules, cotton should cost no less than $2 per kg to convert into yarn. Currently, the cost of converting cotton into yarn is only one cent. This implies that spinning mills lose $40 every kilogramme. A mill with 10,000 spindles would generate 2,500 kg of yarn each day, resulting in a daily loss of one million rupees.
Due to an import tax of 11% on cotton, homegrown cotton is 15% more expensive, which is the cause of the crisis. In the export of yarn, fabric, and clothes, India has lost many international orders and is unable to compete with its neighbours.
The interest rates charged by banks have gradually risen in recent months from 7.5% to 11%. The price of producing yarn has gone up from $5 to $6 per kg as a result.
According to a statement from Tamil Nadu Generation and Distribution Corporation (TANGEDCO), the retail tariff petition for low- and high-tension consumers (LT & LT-CT) as well as the multi-year tariff and tariff increased during peak hours (Time of the Day – TOD) have all been increased. Additionally, the production cost of spinning mills has increased by 6.
Under the Emergency Credit Line Guarantee Scheme (ECLGS), the Centre has offered short-term loans to help the industry recover. However, business owners who took out this loan have used it to get through the crisis as well as to pay for bank overdraft fees, electricity costs, labour costs, ESI, and PF. The spinning mills are now under additional strain as a result of the ECLGS loan repayments, which also increased the cost of output by $5 per kilogramme.
Yarn and fabrics from nations like China, Vietnam, and Bangladesh are freely imported. According to the statement, this has had a significant impact on the entire textile value chain of the nation.
