A crisis is looming in the spinning centres around Coimbatore, which make coarse yarn and in the Karur Chennimala regions (in Tamil Nadu), which produce made-ups and home furnishing clothes for the domestic and export markets from such yarn.
Looms are grinding to a halt for want of specified threads. Spinning mills do not produce the threads for want of the basic input, short staple cotton and waste cotton, and owing to their steep price increase.
The spinners, weavers, traders, and exporters are putting up a united fight and asking for short-term measures like duty relief (waiver of import duty on short staple cotton, exemption form special additional duty of 4%, and exemption from CST and VAT) and long-term plans like broadbasing cultivation of short staple cotton, regulation of exports and liberalising imports.
?The threads for the made-ups are not there in the market, even for a higher price, because the spinning mills are not producing them for want of inputs,? M Sivakannan, managing partner of Amraravathi Textiles, told FE from Karur. According to Southern India Mills? Association (SIMA) chairman, KV Srinivasan, ?The abnormal increase in the price of shorter staple cotton varieties and waste cotton (comber noil and flat strips), used for spinning coarse yarn, have made open-end spinning units and coarser count spinning mills unviable. Even the best mills in the state have incurred huge losses.?
The comber noil price has gone up by over 40% from Rs 36.50 a kg to Rs 52 a kg during January 2007 and January 2008. The flat strips price has gone up by over 55%, from Rs 32 to Rs 50 during the period, he said and added that the yarn prices have gone up only marginally ranging from 5 to 9%. The high import duty of 10% and 4% special additional duty (SAD) have made cotton import uneconomical.
The shortage of cotton is paradoxical, since the country is estimated to have the highest ever production of 310 lakh bales of cotton.
?The bumper crop has not really helped the domestic textile industry due to high cotton prices (almost 20% higher than the rates last year).
The mills in the south face severe shortage of short staple cotton, which are produced mostly in Punjab, Haryana, and Rajasthan, the Northern zone.