Tamil Nadu CM urges Centre to take remedial measures to bring down rising yarn prices
CHENNAI: Raising the plight of the textile industry in Tamil Nadu due to increasing yarn prices, Chief Minister MK Stalin on Monday urged Union Minister of Textiles Piyush Goyal to bring in remedial measures to set right the situation.
The measures include removal of 11 percent import duty on cotton, revamping the commercial terms and conditions prescribed for e-auction of cotton and extending 5 percent interest subvention to the spinning mills towards procurement of cotton during the peak season (December to March).
Referring to the representations received from apparel manufacturers in the state regarding the grave situation of cotton and yarn prices volatility and its impact on the prices of fabrics and garments, the Chief Minister noted that the textile industry was the second-largest employment provider in the state and Tamil Nadu accounts for 1/3rd of the textile business of the country.
"The present crisis has led to mass cancellation of export orders and hardships in fulfilling long-term export commitments. If this situation is not reined in, a large number of apparel and home textile units may soon become unviable resulting in closure and consequent large-scale unemployment and industrial unrest," the Chief Minister pointed out.
Stalin said one of the major reasons for the cotton price volatility is due to the imposition of five percent Basic Customs Duty (BCD), five percent Agriculture Infrastructure Development Cess (AIDC) and 10 percent Social Welfare Cess imposed on these components in the Union Budget 2021-22 which amounts to imposition of overall import duty of 11 percent.
"Another reason for the spurt in cotton prices is the bulk discount offered by the Cotton Corporation of India (CCI) to the traders who procured almost 70 percent of Minimum Support Price (MSP) cotton auctioned by CCI at a lower rate during the cotton season due to availability of 90 days free period and thereafter speculated the market," he added.
Requesting Goyal to direct the concerned ministries to intervene and take the following policy measures to remedy the situation, protect the textile industry and prevent loss of jobs, the Chief Minister said the 11 percent import duty being levied on cotton should be removed to avoid further speculation in the coming months.
Also, the commercial terms and conditions prescribed by the CCI for e-auction of cotton by reducing the minimum lot size to 500 bales which is sustainable for MSMEs should be revamped. Further, yarn manufacturers should be given priority in the procurement of cotton over traders.