All spinning mills should be made to declare their stocks, the CM says in his letter

All spinning mills should be made to declare their stocks, the CM says in his letter

With the cotton and yarn prices going up, affecting the textile industry in Tamil Nadu, Chief Minister M.K. Stalin has sought Prime Minister Narendra Modi’s intervention to improve the situation.

As an immediate measure, stock declaration for cotton and yarn may be made mandatory for all spinning mills so that ginners and cotton traders can obtain actual data on their availability, Mr. Stalin said in his letter to the Prime Minister.

Though the Union government had waived import duty on cotton till September 30 this year, it would take more than three months for the consignment to reach Indian ports after signing of the contract. Effectively import duty waiver would be available only up to June 30, he said.

“Therefore, the Union government may issue suitable clarifications that waiver of import duty will be available for all contracts entered up to September 30,” Mr. Stalin requested. The cash credit limit of the spinning mills to purchase cotton might be extended up to eight months in a year.

“Currently, banks provide a cash credit limit to the spinning mills for the purchase of cotton only for three months while the cotton availability with the farmers extends up to four months and thereafter, it is available in the market for another four months,” he pointed out.

Similarly, margin money sought by the banks at 25% of purchase value might be reduced to 10% since banks were calculating the purchase stock value at lesser rates than the actual purchase/market rates, Mr. Stalin said.

The Chief Minister also recalled having taken up the issues facing the textile industry with Union Finance Minister Nirmala Sitharaman and Union Minister for Textiles Piyush Goyal. The Union government took note of the situation and the State’s request and notified the withdrawal of import duty levied on cotton, he acknowledged.

“Despite this, the situation has not improved and prices of cotton and yarn continue to rise. This precarious situation has widespread ramifications for the textile industry in Tamil Nadu. A large number of spinning, weaving and garment units face the danger of closure due to unsustainable demands on their working capital and price mismatch between the agreed price of supply to the buyer vis-a-vis the cost of production,” he contended.

Manufacturers of garments were suffering huge losses and many MSME units had already closed their operations. This had resulted in massive jobs losses in a sector that is traditionally an employment generator, Mr. Stalin said.

“The situation has also had an adverse impact on handloom weavers in the cooperative sector as they are not able to procure yarn and supply the same to their members for the weaving of cloth. The growing discontent in the industry and among the weavers is alarming,” the Chief Minister said.

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