Sources close to the industry point out that the prices for such yarn have dropped to an all-time low leading to the present crisis. In view of this, they add, several spinning units have been curtailing their production in order to minimise losses since complete closure of factories would not be a viable proposition. The price realisation for polyester-viscose (70-30) blended yarn of counts 30s, according to sources, has now dropped as low as Rs 75 per kg from the previous month's level of Rs 80 per kg which was already very low and unremunerative.

Exports of blended yarn are facing cut-throat competition, particularly from countries in East Asia, Taiwan, South Korea, Thailand and Indonesia. These countries have set up substantial capacities for synthetic fibres and they are determined to sell their production in the overseas markets as domestic demand is limited. Moreover, SouthKorea, Thailand and Indonesia in particular have the advantage of highly depreciated currencies. Indian exporters of blended yarn did not depend much on exports to East Asian countries.

Most of the Indian exports were to Europe and America. However, the East Asian countries are now undercutting India in all these markets.

Indian exporters are, therefore, finding it extremely difficult to maintain their present position in export markets, let alone the question of stepping up exports.

Another problem faced by manufacturers of blended yarn is that the domestic demand for such yarn has also slowed down as the demand for fabrics has slackened. Normally the upcountry offtake of fabrics picks up much ahead of Dassera as stockists start making purchases to meet the festival demand. This year, however, the pre-Diwali demand for fabrics reminded insipid. The main reason for this situation is that the spiralling rise in prices of many essential commodities and services have deprived most of the people of theirpurchasing power.

They, therefore, put off buying fabrics to the extent possible.This has created problems also along the pipe line. Upcountry stockists are delaying payments to local suppliers who in turn prefer to keep down their liftings from the mills. This eventually has an adverse impact on the industry engaged in the manufacture of yarns.

Now every one is seen hoping that the demand for fabrics may pick up in the marriage season which may start after about a month.

Others, however, do not pin much hope even on the marriage season in view of inability of the government to keep down prices of essential commodities and services. If one turns to the picture of exports of blended yarn one finds it quite encouraging. For instance, exports of polyester/viscose yarn which were of the order of 2411 tonnes in April 1998 had declined to 1918 tonnes by August 1998. During the same period shipments of polyester/cotton blended yarn have dwindled to 2046 tonnes from 2458 tonnes. The trend in these exports canbe seen from the following statistics:

Some exporters of blended yarn, however, hope that recent fluctuations in the world exchange rates have weakened the US dollar and have hardened some of the East Asian currencies, while the rupee is now more or less stable. This may help Indian exporters face competition in international markets better, provided other unexpected developments do no mar such prospects.