The textile industry in Andhra Pradesh, which provides direct employment to thousands of semi-skilled workers apart from a driver of economic growth, is now staring at a deep and unprecedented crisis after the spinning mills declared a production holiday from October 10.
The decision to cut down on the number of working days comes in the backdrop of a mounting global recession, slump in exports and rising production costs. Most of the spinning mills are now running at a reduced capacity.
There are over 125 spinning mills in the State with a combined capacity of 35 lakh spindles and many are cutting down their production of yarn. Indian yarn is known for its fine quality and is preferred by the European and American retailers.
“There has been a slump in production of yarn due to weak demand. The closure of spinning mills has worsened the situation. Buyers are now reluctant as the prices of yarn has fallen drastically. All this has resulted in piling of stocks at spinning mills. This double whammy to cotton farmers and traders is unprecedented ”Lanka Raghurami ReddyAndhra Pradesh Textile Mills Association Chairman
“There has been a slump in production of yarn due to weak demand. By the time the production begins, cotton farmers are getting just ₹6,900 per quintal as against ₹9,000 per quintal. The closure of spinning mills has worsened the situation. Buyers are now reluctant as the prices of yarn has fallen drastically. All this has resulted in piling of stocks at spinning mills. Spinning mills have been declared NPAs. This double whammy to cotton farmers and traders is unprecedented,” says Andhra Pradesh Textile Mills Association Chairman Lanka Raghurami Reddy.
The entry of multinational giants in the market has hit the domestic industry, the largest organised labor sector in the country, and given scope for speculation, resulting in the steep increase in cotton prices. Despite the concerted efforts of the association, the South Indian Millers’ Association and the Confederation of Textile Industry, the Central government have not taken the remedial measures to check the spiraling prices of cotton and protect the domestic textile industry, Mr. Chowdary points out.
Many units are cutting down their production of yarn
Stocks are piling at spinning mills and many units have been declared NPAs
Arrears including power subsidies of ₹1,400 crore is yet to be cleared
Multinationals are making bulk purchases of cotton from farmers well below ₹20,000 per candy and selling it at ₹30,000 per candy
Referring to the threat posed by the multinationals, he says those companies have almost cornered the domestic industry by making bulk purchases of cotton from farmers well below ₹20,000 per candy and are now selling them at ₹30,000 per candy. The exports have touched a new high of 85 lakh bales this year as against the cotton advisory board’s caution of limiting it to 65 lakh bales, he explains.
The millers hope that the State government would bail them out by releasing the power subsidies immediately. Among the major demands put forth by the owners of spinning mills are immediate release of arrears to the tune of ₹1,400 crore.
Thanking Chief Minister Y. S. Jagan Mohan Reddy for his resolve in releasing ₹237 crore arrears in September 2021, Mr. Raghurami Reddy says that spinning industry would plunge into a great crisis if the State government does not release the arrears.
“We are staring at a deep crisis and many of us are not in a position to pay interest to banks. We urge the State government to consider our plea and release the arrears immediately,” appeals Mr. Raghurami Reddy.