The power ministry had instructed the State Regulatory Commission that all consumers consuming 1 MW or more be excluded from the category of consumers who can avail the tariffs set by the commission.
According to the ministry of textiles, this decision would seriously impact textile units as they will be forced to source power through the open access method. States like Tamil Nadu and Andhra Pradesh the textile producing hubs have already been facing power shortages. A senior textile ministry official told Fe, The textiles industry in Tamil Nadu alone is losing about R300 crore a day due to fall in production because of power restrictions and escalating costs.
SV Arumugam, chairman, Confederation of Indian Textiles Industry, said: Already reeling under market shocks, the textile and clothing industry would find it extremely difficult to face the double whammy of this regulation by the government. I have also written to the ministries of textiles and power for the continuation of the previous liberal power purchase policy.
The combined net profit of BSE Sensex companies in the sector fell from R5,166 crore in 2010-11 to R1,845 crore in 2011-12, which is a decline of 64%. DK Nair, secretary general, CITI, said: The financial results of 287 textile companies listed on the BSE for 2011-12 have confirmed our worst fears. There is a sharp decline in net profits during the year compared to the previous year, despite a growth in net sales. This is indeed a worrying trend that shows a combination of increasing input costs and declining profits.
Arumugam said, Speculation of commodity markets and avoidable government intervention in market dynamics have played a major role in driving the industry into crisis. We can only hope that policymakers have learned the lessons on the perils of preventing the industry from passing on the increasing costs of production to consumers.
SP Oswal, CMD, Vardhman Textiles, said: Policy making in India is complex as different ministries have their individual approaches and federal structures of our democratic system gives autonomy to states in formulating their fiscal and other policies.