The Hindu : Tamil Nadu News : Industry sceptical over fall in yarn price

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Thursday, Sep 30, 2010
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Tamil Nadu

Industry sceptical over fall in yarn price

Staff Reporter

Central government decides to extend the ban on cotton exports till November 1
Duty drawback for home textiles brought down to 7.1 per cent from 8.2 per cent

KARUR: With the Central government deciding to extend the ban on cotton exports till November 1, the textile industry has reacted sharply with deep scepticism on any fall in yarn price.

This is just a stop gap arrangement and will not contain the fluctuating price of yarn , the textile sector here said.

“What we have been demanding from the Centre was a permanent solution to the exorbitant yarn price hike in recent months fuelled by the decision to allow export of cotton, waste cotton and yarn reducing availability to the local textile industry.

Permanent solution

The sharp rise in yarn prices could not be offset with a temporary shifting of goal posts and we reiterate that we need a permanent workable solution from the Centre on the issue of cotton and waste cotton export,” pointed out M. Nachimuthu, president of the Textile Manufacturer Exporters' Association.

The home textile exporters here observed that export of waste cotton, used as the raw material for coarser counts that was in great need for the home textile industry, was of no use to the agriculturists and any export to the detriment of textile industry in the country could have no justification.

The ban on export of cotton, waste cotton and yarn that was to have expired on September 30 has been extended to October end when good quality harvest was expected to arrive in the market.

The local textile industrialists were worried over the possibility of prime quality cotton finding its way to competitive players in other countries thereby putting them at a disadvantage. To some extent that concern has been allayed.

But the move by the Centre offers no solution to the exorbitant yarn price hike and that is what Mr. Nachimuthu and fellow textile industrialists aver. “The Central Government should take a realistic attempt at solving our problems .

Calibrate cotton exports

Unless export of cotton and waste cotton was banned there was no way yarn prices would come down.

Alternatively we want to Centre to calibrate cotton exports and ban waste cotton and yarn exports altogether. Besides that we urge the Centre to put in place a mechanism that would govern yarn prices routinely, ” they said.

Unfortunately the home textile industry has been dealt a double blow with the revision of the export duty drawback policy that has been in vogue. Last week's review of the duty draw back policy reduced the draw back for home textiles from 8.2 per cent to 7.1 per cent and that has come as a bolt from the blue for the Karur home textile exporters.

Fear of shutdown

Considering all the factors, textile exporters here have expressed the fear that if things were to continue like this at least 50 per cent of the thousands of units involved in the textile and allied sector would be forced to shutdown business, Mr. Nachimuthu has said.

To impress upon the Centre the need to revisit the cotton export policy and reduction in duty draw back rates the textile industry is planning to dispatch a delegation to meet the Union Commerce Minister Anand Sharma, Union Textiles Minister Dayanidhi Maran and the Chief Minister M. Karunanidhi to seek their good offices in ridding the textile industry of its present woes.

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