Losses in India’s textile industry are spinning out of control, jobs are being snipped off, and exports are falling off. Yet there’s no focus on an industry which is being crippled by high interest rates and high taxes on export.
The Indian textile industry which provides employment to about 10 crore people directly and indirectly and accounts for 2% of GDP, is staring at huge job loss, not seen in last 10 years, claimed an apex body representing the industry.
According to The Northern India Textile Mills Association (NITMA) – an association of textile mills located in Northern India, textiles industry is facing the worst financial crisis and slowdown, which has forced spinning companies to cut down their production and shut down their mills.
“Indian spinning industry is facing the biggest crisis, resulting in huge job losses,” reads an advertisement issued on behalf of NIMTA.
As per NITMA, apart from excess spinning capacity, poor demand for India yarn from overseas markets has led to the crisis. It also blamed “high interest rates” and “state and central taxes on export” for worsening the crisis.
Though India’s cotton-spinning industry has been struggling with profitability over the years, the recent spurt in cotton prices has added to the woes, claimed NIMTA.
Highlighting decline in the export, NIMTA said that during April-June period of this fiscal year, export of cotton yarn fell by 34.6% to $696 million as compared to $1,063 million in the same period last year.
Seeking government’s intervention to prevent job losses, the industry body has pointed out that the slowdown resulted in closure of many mills – approximately one third of whole spinning capacity across India.
That textiles mills are incurring huge financial loss. Therefore, it is becoming difficult for them to buy and consume India cotton any more.
That upcoming cotton crop of about 40 million bales, which is valued at ₹80,000 crore, would not find buyer in domestic and overseas market as the Indian market was not market-driven since the government directly supports farmers with minimum support price (MSP) level.
Issuing an appeal, NIMTA sought help from the government to avoid the spinning sector from turning into non-performance assets (NPAs). Asking government for “rebate schemes” the industry body has also sought for “two years of moratorium” through the advertisement.
The union government has maintained a studied silence over the issue. Union Minister of Textiles, Smriti Zubin Irani, who is very active on Twitter, has not said anything about the ongoing crisis.