'Spinning comes to a grinding halt today'

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SME Times News Bureau | 23 May, 2011
Spinning mills in different parts of the country remained closed today following a combined appeal from the Confederation of Indian Textile Industry (CITI) and several associations of cotton spinners for a one-day closure of mills. The spinning sector has been demanding government action to check falling prices of cotton yarn both in the domestic and the international markets.

CITI also called for a production cut back of 33.33 percent (1/3rd) of existing daily production from tomorrow.

Claiming that the closure was complete all over the country, CITI Chairman Shishir Jaipuria said in a statement that restoration of draw back facility on cotton yarn exports is the most important step that government can now take to ease the crisis in the spinning industry.

He stated that a virtual ban on exports of cotton yarn during over two months in the last quarter and a declining trend in domestic demand have resulted in a huge unsold stock of cotton yarn with the spinning mills all over the country.

"When exports were allowed from April 2011, the accumulated stock caused a crash of cotton yarn prices in the global and domestic markets. Worse still, consumers started shying away from the markets, because of their perception that prices would decline further since mills are flush with stocks and have to unload them at any cost," Jaipuria added.

Te government had clamped quantitative restrictions on cotton yarn exports, which is to the tune of 720mn kg. for the last fiscal. However, later the restrictions were eased allowing exports of cotton yarn produced exclusively out of imported raw cotton, before finally lifting the restrictions fully as of April 01, 2011.

According to the CITI chief, discontinuation of Indian exports had pushed up prices of cotton yarn in the global markets to unprecedented levels during last quarter and over supplies from India have led to the crash of global prices from April 2011.

Also, he added, domestic demand is lacklustre and as a result cotton yarn producers are finding it extremely difficult to dispose of the accumulated stocks. "The curtailing of production through full closure on May 23 and one third closure from May 24 is expected to help in reducing stocks to some extent," he added.