Thousands of spinning mills across the country decided on Tuesday to cut back one-third of their daily production for a week to boost demand and to highlight their plea for steps to check the fall in cotton yarn prices and restore tax benefits.
The mills launched the novel protest on the call given by the Confederation of Indian Textile Industry (CITI) and several associations of cotton spinners.
A majority of the textile mills in Punjab, Himachal Pradesh, Uttrakhand, Tamil Nadu and Andhra Pradesh stopped production for a day on Monday. In Tamil Nadu, nearly 2,000 mills remained closed.
CITI chairman Shishir Jaipuria demanded the restoration of the drawback facility for cotton yarn exports to ease the crisis in the spinning industry. A virtual ban on cotton yarn exports for more than two months in the last quarter and the declining domestic demand had saddled the mills with a huge unsold stock of cotton yarn.
“When exports were allowed from April 2011, the accumulated stock caused a crash in cotton yarn prices in the global and domestic markets. Worse still, consumers started shying away from the markets because of their perception that prices would decline further, since mills are flush with stocks and have to unload them at any cost,” Mr. Jaipuria said.
The CITI has also decided to hold a meeting of the stakeholders in the first week of June to take stock of the situation.
Reacting to Monday's closure of mills, the Union Ministry of Textiles said in a statement on Tuesday that cotton yarn exports had already been brought under the open general licence (OGL) category from April 1 this year, and there was no curb on yarn exports at present. Last year, in the backdrop of the supply line disruptions and steep increase in the process of cotton and cotton yarn, the government initiated a number of steps to ensure raw materials were available for the textiles industry.
The statement further said that keeping in mind the need to balance the interests of all stakeholders across the value chain, a multi-pronged approach was adopted. It included, among other things, capping of cotton exports at 55 lakh bales for the 2010-11cotton season and permitting 720 million kg of yarn exports during 2010-11. The yarn exports were permitted throughout the year, and there was no ban, it added.
To ensure the viability of the operations of handloom weavers, powerloom weavers and the garment industry in the face of the highest ever price rise in decades during 2010-11, the government had capped cotton yarn exports at 720 million kg, keeping in view the domestic consumption. Even the 720 million kg of yarn exports, representing a 22 per cent increase over 589 million kg in 2009-10 and 556 million kg in 2008-09, would be the highest ever export performance by the Indian spinning industry.
The policy initiatives yielded results, with the prices of both cotton and cotton yarn having achieved some degree of stability, it said.
