Textile Units To Remain Shut On May 23, Cut Output 33%.

Faced with situation arising out of huge decline in demand and prices of cotton yarn, India's spinning mills in protest would remain shut on May 23 and will cut down their production by 33.3%.

Speaking on the sidelines of a meeting organised by the Confederation of Indian Textiles Industry (CITI) along with major textiles associations, Shishir Jaipuria, chairman, Citi, said, "It has been unanimously decided in the meeting that spinning mills would be closed on May 23. From May 24 onwards, it was decided to have a production cut back of 33.33% of existing daily production. It has also been decided that a review meeting of the stakeholders will be called in the first week of June to take stock of the position to chalk out further action."

Jaipuria said that a combined representation has already been sent to the textile minister, commerce minister and senior offcials in the finance ministry highlighting the current problems of the textile industry.

The government had imposed a restriction on export of cotton yarn at 720 million kgs for the year 2010-11 as a result of which there was no export of cotton yarn for over two and a half months from January 15, 2011 to March 31, 2011. This led to a huge stock of unsold cotton yarn with the mills. Mentioning that the textile mills are holding a stock of around 500 million kgs, Jaipuria observed that this has completely eaten into their working capital and mills are finding it impossible to buy cotton.

"Our sincere hope is that with the support of the government and cutback in production the crisis situation will be blown over and the industry will be back on the rail ” textile leaders opined.

The leaders of various textiles associations also said there is a need for the government to take steps which would would be required to prevent the current crisis including reinstating the drawback facility on export of cotton yarn and the duty entitlement passbook scheme (DEPB) benefits on export of cotton yarn which were withdrawn in April last year.

They have further demanded that the government should withdraw the excise duty of 10.30% which was imposed on manufacture of garments till the GST is introduced. There is also a need in providing 2% interest subvention for all textile and clothing products excluding fibres.

Jaipuria said that the government should impose no restrictions on export of cotton yarn in future so that mills can start winning the confidence of their buyers which will now take a long time since the damage has already happened and buyers have moved to the competitors.

Source : financialexpress.com