Revealing this, sources close to the industry point out that PFY exports which scaled a new peak of 46,109 tonnes in 1997-98 from 21,458 tonnes in the year before, are now going downhill. This can be seen from the fact that shipments of PFY, which totalled 8,802 tonnes in March 1998, plunged to 6,075 tonnes in April and to 4,636 tonnes in May 1998, indicating a sharp decline of over 47 per cent in two months.

Informed sources point out that overseas buyers are reluctant to open letters of credit for fresh business in the wake of a slump in PFY price abroad to just around US $0.80 per kg (C&F), whereas it used to be quoted at more than $1 per kg not long ago. It is pointed out that Thailand, Indonesia, South Korea and Taiwan have started offering stiff competition. Besides, a sharp reduction in the DEPB entitlement from 20 per cent to 14 per cent has dealt anotherblow to these exports. Also, export credit in India is much costlier than in some competing countries.

It is no surprise, if about half a dozen PFY units have been forced to virtually stop their production in view of the sharp increase in capacity and slowdown in the domestic as well as export demand. That the industry is facing rough weather is clear from the fact that Indo Rama Synthetics, a significant player in this field, had posted a huge loss of Rs 87 crore for 1997-98. Several smaller units have also incurred varying losses. Unless the situation improves soon, several of these units might be driven to the sick-bed.

Several spinning mills engaged in the manufacture of blended yarn are also in trouble. About five or six of them have virtually suspended their production,while several others are resorting to production cut-backs. According to sources close to this sector nearly each and every spinning mill engaged in the manufacture of such yarn is now incurring losses and several of them aretottering. Many independent texturisers are worried about their survival. They point out that 150D texturised yarn is selling in the market around Rs 66-67 per kg. If one deducts from this packing and power charges as well as 34.5 per cent excise duty the net realisation may come to Rs 43-44 per kg. This is clearly an unworkable situation. threatening the survival of small independent texturisers.

Exports of blended yarn have also slowed down, though these are not dependent on east Asian markets. The main reason for this increased competition from other countries in the export markets. Industry circles are firmly of the view that if these exports are to be sustained, the government should make pre-shipment and post-shipment credit available at 6.5 per cent, electricity for export production should supplied at concessional rates and interest rates for the import of machinery under the EPCG scheme, should be lowered.