Increase in excise duty would lead to an increase in the price of cloth and this would be a `death blow' to cotton spinning industry, which was already on `sick bed,' Kerala Textile Mills Association chairman C Valliappa told the annual general meeting of the association here last night.Valliappa said the textile industry in the country, and more so the spinning mills in the southern region, were passing through a severe crisis resulting in huge losses.

He said the factors contributing to the present crisis were the steep rise in cotton prices due to low output, the increasing wages and other input costs.

Added to this was the high cost of finance, decline in sales realisation, with no parity between cotton and yarn prices, inadequate availability of working capital and term loans from banks and financial institutions.He said theadditional cess of rupee one per litre on High Speed Diesel would increase power generation costs.

He urged the state government to defer sales tax on yarn for three to five years, exempt purchase tax on local cotton and also sought support from FIs and banks.