Hostile market conditions, govt. ‘apathy’ put many mills on the edge

The textile industry in the State is facing the worst crisis in years. Weighed down by high input cost of raw cotton, drastic drop in yarn export to China, huge power bills, non-availability of working capital limits, the industry is further crippled by delay in payment of arrears of industrial incentives amounting to nearly ₹1,125 crore.

Weekly holiday

“The textile industry is passing through an unprecedented crisis and most of the units are continuously failing to serve the repayment of their term loan instalments or interest to banks, and the accounts are slipping into NPAs on a regular basis. The spinning mills have already declared a weekly holiday on Monday beginning July this year,’’ Lanka Raghurami Reddy, president of AP Spinning Mills Association, told The Hindu on Monday.

There are about 120 spinning mills in the State having a total number of 35 lakh spindles. With an investment of ₹10,500 crore, the textile industry is one of the main sources of employment. The production this year has touched 6,87,884 metric tonnes fetching revenues worth ₹7,842 crore through exports. The domestic sale of yarn alone has touched 2,75,164 metric tonnes per annum.

The reasons for the drastic downturn in the industry are many. Fuelled by steep increase of minimum support price of cotton kappas from ₹4,400 to ₹5,500, the price of raw cotton has shot up to ₹49,000 per candy from ₹38,000.

Adding to the woes of the industry, the State government is yet to clear arrears of industrial incentives to the tune of ₹1,125 crore, which is necessary to keep the credit worthiness of the company intact to get financial assistance from banks. The arrears include incentive claims for 2017-2018 worth around ₹290 crore and around ₹ 279 crore for 2018-19 totalling ₹ 569 crore. The delay in payment of sanctioned incentives in the last four years has forced many mills to down their shutters.

Published On : 04-10-2019

Source : The Hindu