Tamil Nadu’s MSME spinning mills stop production and yarn sales

Tamil Nadu’s MSME spinning mills have decided on the stoppage of production and yarn sales due to heavy losses of the Spinning Industry.

It was decided in an emergency meeting of MSME Spinning Mills Associations’ held at Coimbatore. It has been unanimously decided to declare stoppage of production and sale of yarn from 15th July.

For the first time in the last 20 years, exports of yarn and textiles have declined by around 28 per cent.

In a statement, the South India Spinners Association (SISPA) and India Spinning Mill Owners Association (ISMA) informed that the spinning industry in Tamil Nadu has been facing unprecedented losses for several months.

As per guidelines of South Indian Textile Research Association (SITRA), the minimum conversion cost of cotton to yarn should be Rs. 2 per kg. In today’s situation, the conversion cost from cotton to yarn is only Rs. 1. So spinning mills incur a loss of Rs. 40 per kg.

A mill having about 10,000 Spindles would produce 2,500 kg of yarn per day, which is incurring a loss of Rs. 1,00,000 per day.

As the mills are forced to incur huge losses, unable to meet the expenses of bank loan repayments (principal and interest), cotton purchase payments, electricity bills, GST, ESI, PF, etc., the mills are at a standstill situation. If this situation continues, the spinning mills will soon become Non-Performing Assets (NPA) and the mills will be at risk of permanent closure.

Due to 11 per cent import duty on cotton, the price of domestic cotton is 15 per cent higher. As a result, India has lost many international orders and is unable to compete with neighbouring countries in the export of yarn, fabric and clothing.

At the same time, over the past several months, banks’ interest rates have gradually increased from 7.5 per cent to 11 per cent. As a result, the cost of yarn production has increased from Rs. 5 to Rs. 6 per kg.

Both the associations have requested the Government of India to immediately withdraw the 11 per cent import duty imposed on cotton. And to immediately reduce the interest rates of the banks to the previous level of 7.5 per cent.