Textile mills and garment units have reduced production as high raw material prices have made operations unviable for these units.
The South India Hosiery Manufacturers’ Association (SIHMA) president AC Eswaran said that garment units catering to the domestic market have brought down production by 50%. Lakhs of workers, who are from other districts and work in Tiruppur, are affected by this, he said.
According to the South India Spinners Association (SISPA), several textile mills in the Micro, Small and Medium-scale Enterprises (MSMEs) categories have downed shutters as quality cotton is not available at affordable prices.
The spinning sector is incurring huge cash losses in day-to-day operations due to high cotton prices and low yarn prices. Cotton was sold at about ₹1 lakh a candy (355 kg) and it dropped to ₹82,000 a candy in July. It has risen to the ₹1 lakh level again. The hike of ₹18,000 a candy was within a short period. The mills are incurring cash loss of ₹40 to ₹50 a kg of yarn because of this volatility in cotton prices, said association president J. Selvan. Many mills may become non-performing assets (NPA), if the current situation continued, he said.
The associations said multinational companies (MNCs) should not be permitted to procure domestic cotton.
Some MNC companies are purchasing more, and stocking up, alleged SIHMA. Export of cotton and yarn should be permitted only after meeting the domestic needs, it said.
The SISPA president added that cotton should be removed from the Multi Commodity Exchange platform and cotton exports should be permitted subject to its availability for the entire season.
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Printable version | Aug 18, 2022 6:58:27 pm | https://www.thehindu.com/news/cities/Coimbatore/high-raw-material-prices-force-textile-units-to-reduce-production/article65783583.ece