Rising cotton and yarn prices: Tamil Nadu CM Stalin seeks PM's intervention to solve disruptions faced by textile industry

COIMBATORE: Chief minister M K Stalin on Monday sought the intervention of Prime Minister Narendra Modi to solve the serious disruptions faced by the textile industry in Tamil Nadu over rising cotton and yarn prices.
In a letter to the PM, Stalin stated that despite the Union government withdrawing import duty levied on cotton, the prices of cotton and yarn have been continuously on the rise.
Stalin's letter to the Prime Minister came at a time when the garment units in Tirupur, Erode, Karur and Salem districts announced strike for two days from Monday against abnormal cotton and yarn price hike.
He added, "This precarious situation has widespread ramifications for the textile industry in Tamil Nadu. A large number of spinning, weaving and garment units face the danger of closure due to unsustainable demands on their working capital and price mismatch between the agreed price of supply to the buyer vis-a-vis the cost of production."
As a result, the manufacturers of garments are suffering huge losses and many MSME units have already closed their operations, the CM said.
Stating that this condition had resulted in massive job losses in a sector, Stalin said it had an adverse impact on handloom weavers in the cooperative sector as they wer not able to procure yarn and supply the same to their members for the weaving of cloth.
As an immediate measure, he suggested that stock declaration for cotton and yarn be made mandatory for all spinning mills so that ginners and cotton traders can obtain actual data on cotton and yarn availability.
The chief minister said he had brought the issue to the notice of Union finance minister Nirmala Seethraman and textile, commerce and industry minister Piyush Goyal.
"The Union government took note of the situation and our request and notified the withdrawal of import duty levied on cotton till September 30. As it takes more than three months for the consignment to reach Indian ports after the contract is entered into, effectively import duty waiver will be available only till June 30," he added.
The chief minister stated the banks currently provide a cash credit limit to the spinning mills for the purchase of cotton only for three months while the cotton availability with the farmers extends up to four months.
Therefore, he suggested that the cash credit limit of the spinning mills to purchase cotton be extended for eight months in a year. Similarly, margin money sought by the banks at 25% of purchase value may be reduced to 10% since banks are calculating the purchase stock value at lesser rates than the actual purchase/market rates in the market.