Spinning mills to go on strike

As cotton yarn prices fall and inventories pile up, spinning mills from all over the country have decided to go on strike on May 23 and cut one third of their daily production for a week starting from May 24 onwards, demanding the government to take some immediate action to save the industry and reconsider the current cotton and cotton yarn policies, said Shishir Jaipuria, chairman, CITI at a press briefing in New Delhi.

According to Jaipuria, steps such as reinstatement of drawback facility on cotton yarn exports, withdrawal of excise duty of 10.30 percent on garments, providing two percent interest subvention for all textile and clothing products, and providing one year’s moratorium for repayment of loans to spinning mills, among other things need to be taken by the government.

Over the past month, cotton prices have lost more than 20%. Yarn prices have shed over 30% in the past two-and-a-half months, from Rs270/kg to around Rs195/kg, he said.

There was no export of cotton yarn for over two and a half months from 15th January, 2011 to 31st March 2011 which led to a huge stock of unsold cotton yarn with the mills as on 31st March 2011, considerably higher than the figures released by the Textile Commissioner in the last meeting of the Cotton Yarn Advisory Board (CYAB), Jaipuria said.

"Our understanding is that exports of cotton yarn during the last five weeks have amounted to less than 50 million kgs as against 70-75 million kgs per month, which was being exported last year before the restriction was imposed," CITI Chief pointed out.

Faced with cash losses and negligible working capital, mills are finding it impossible to buy cotton and this has resulted in a decline in cotton prices in the market. However, that decline in cotton prices is no indication of adequate availability, he added.