Stalin urges PM to cool cotton prices

He sought specific immediate remedial measures from the Union government to help the industry and urged the PM to intervene in the issue urgently.

Published: 17th May 2022 05:36 AM  |   Last Updated: 17th May 2022 05:36 AM   |  A+A-

A farmer working on a cotton field near Tiruchy | MK Ashok Kumar

By Express News Service

CHENNAI:  As Tamil Nadu textile units began a two-day strike on Monday, Chief Minister MK Stalin wrote to Prime Minister Narendra Modi expressing serious concern over the continuous increase in cotton and yarn prices, which is putting many units at the risk of closure.

He sought specific immediate remedial measures from the Union government to help the industry and urged the PM to intervene in the issue urgently. Hit by the rise in cotton and yarn prices, textile industries, including export and local manufacturing, weaving and knitting, dyeing and stitching units in Tirupur, Erode and Karur districts, employing over 10 lakh people, have embarked on the strike. 

In his letter, Stalin said, as an immediate measure, stock declaration for cotton and yarn should be made mandatory for all spinning mills so ginners and cotton traders can obtain actual data on cotton and yarn availability. 

Referring to the waiver of import duty on cotton till September, he said, as it takes more than three months for consignments to reach Indian ports after a contract is entered into, effectively, the waiver would be available only till June 30. So, the Centre should issue clarifications that the waiver is available for all contracts entered into up to September 30, Stalin said. 

‘Credit limit of spinning mills may be extended’

Further, the CM said banks provide a cash credit limit to spinning mills to purchase cotton only for three months, while the cotton availability with the farmers extends up to four months. After that, it is available in the market for another four months.

“Therefore, the cash credit limit of spinning mills to purchase cotton may be extended up to eight months in a year. Similarly, margin money sought by the banks at 25% of purchase value may be reduced to 10% since banks are calculating the purchase stock value at lesser rates than the actual purchase/market rates,” Stalin added. He said despite the withdrawal of import duty on cotton following representations to Union Ministers Nirmala Sitharaman and Piyush Goyal, the situation had not improved, and prices of cotton and yarn continue to rise.

“This precarious situation has widespread ramifications for the textile industry in TN. Many 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,” Stalin pointed out. The CM said that the manufacturers of garments were suffering losses, and many MSME units had closed operations.

“This has resulted in job losses in a traditional employment generator sector. The situation has also harmed handloom weavers in the cooperative sector as they cannot procure yarn and supply it to their members for the weaving of cloth. The growing discontent in the industry and among the weavers is alarming,” he added.



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