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A frantic industry revival bid
For well over six months, the Indian textile
industry is virtually struggling to come out
of the worst-over crisis in its career caused
mainly by the wayward and unpredictable
Government policy on cotton and yarn. Poor
assessment of the cotton crop and consump-
tion and the Government resolve to export
the raw material without adequately meeting
domestic demand had had its adverse im-
pact. When, a few months back, cotton prices
started soaring, spinning mills were assured
by the Government that not a single bale in
excess of the approved 55 lakh bales would
be exported. By that time, the damage had
already been done. Several mills had bought
and stocked excess cotton by paying exorbitantly high prices in anticipation
of fetching more proft. The next blow to the industry came with the clamping
of an export ceiling of 720 million kg of cotton yarn against the backdrop of
a sharp rise in prices and at a time when regular importers of Indian yarn had
been diverted to other markets. Over 3,000 spinning mills in the country were
forced to resort to production cut, resulting in huge inventories with them.
The Textiles Minister, Mr. Anand Sharma’s frst task after assumption of
power was removal of the yarn export curbs. This of course led to a cut in
accumulated stocks with mills to a reasonable level of 300 million kg. How-
ever, 25-30 per cent of yarn production capacity in the country is lying idle
since May 23 last. The CITI demand for a comprehensive relief package is
more than justifed considering the present plight of the yarn sector. Mills do
fnd it extremely diffcult to repay loans taken in the recent past for their sheer
survival. A two-year moratorium on mills’ repayment of loans and interest is
just unavoidable, as also other relevant sops for industry survival in general.
On his part, Mr. Sharma has impressed the industry with a series of mea-
sures announced at different fora for restoring it to health. Besides the policy
thrust on technical textiles and extension of TUFS during the 12th Plan peri-
od, he has broadly outlined his revival plan that envisages special incentives
for exports to the US and the EU, extension of the 2% subvention on rupee
export credit to cover handlooms and all SMEs, etc. Market diversifcation
implies addition of 45 new markets for incentives in Africa, Latin America
and Central Asia. Though it has received all-round appreciation, the success
of Mr. Sharma’s development strategy can’t be taken for granted in view of
the deteriorating Indian and world economic scenario.
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The Textile Magazine
NOVEMBER 2011
R. Natarajan,
Managing Editor & Publisher
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Edited & Published by R. Natarajan on behalf
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No.38, Thomas Road, 2nd Street, T.Nagar,
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TEXTILE MAGAZINE
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