Governance

Spinning industry seeks government help

Industry association recently published advertisements in newspapers, seeking govt attention

 
By Jitendra
Last Updated: Thursday 22 August 2019
Photo: Getty Images

The Northern India Textile Mills Association (Nitma) published advertisements in prominent English dailies on August 20-21, 2019, urging the Union government to help the spinning industry come out of a crisis.

A day later, there was no government response. Nitma also submitted a memorandum to the Union finance ministry on similar lines early August.

The spinning industry was in dire straits due to global developments and domestic policies, the association claimed. The 'crisis' would affect 100 million people, directly or indirectly connected with the industry, according to its advertisements.

“We are working along with the government at different levels but the media is portraying that our association is in conflict with the government,” Nitma Secretary General G Balasubramanian told Down to Earth

Export of yarn from India has shrank nearly 35 per cent to $696 million in April-June 2019 from $1.06 billion a year ago. Taxes levied by the central as well as state governments have added to costs. Costly raw material and steep interest rates have put the business into the red, the association claimed. 

It blamed higher minimum support prices for cotton. This year's cotton output is estimated to be 40 million bales, worth Rs 80,000 crore.

“The higher domestic price would make it difficult for domestic industries to absorb the upcoming year’s production of cotton, which would further affect growers,” claimed a member of Nitma who did not wish to be named.

Higher domestic prices led to losses of Rs 20-25 per kg of cotton, according to NITMA.

The cheaper imports of garments and yarn from countries like Bangladesh, Sri Lanka and Indonesia has also affected the industry. Almost a third of the spinning industry was not operational, the association claimed.

The Indian textile industry is the second-largest manufacturer and exporter in the world. The share of textile and clothing in India’s total exports was 13 per cent in 2017-18. India has a share of five per cent of the global trade in textiles and apparel.

This industry directly employs 14.9 million in the textiles manufacturing sector and 2.7 million in the textiles and apparel sectors.

Global developments

Agriculture policy expert and trade analyst Devinder Sharma, however, alleged that Nitma was misinforming the public.

“Blaming farmers is the easiest way out,” he said. “In reality, Vietnam, which doesn’t grow much cotton, has become the biggest exporter of cotton yarn to China because China has invested hugely in Vietnam to supply yarn,” he added.

The Indian spinning industry's slowdown was also the result of an ongoing trade war between the United States (US) and China. The Trump Administration has imposed tariffs on China’s apparel exports to the US.

This has created a slowdown in China’s apparel market, which has further hurt India’s cotton market as India was the largest supplier of raw material to China.

Besides, India faces competition from countries like Bangladesh, which have competitive manufacturing costs and enjoy duty-free access to major textiles and apparel markets like the European Union (EU).

China and Vietnam’s textile industries have attained economies of scale, thereby giving competition to India’s textile industry globally.

According to the data of the Directorate General of Commercial Intelligence and Statistics, export of textiles increased by 0.6 per cent — from $19,972 in 2014-15 to $20,420 in 2018-19.

India’s export value to the EU also shrank in the last five years — to $9.5 million in 2018 from $9.8 million in 2014. Bangladesh's pie, meanwhile, increased to $23.6 million from $17.7 million in the same period. Sri Lanka's share remained at $2.4 million.

India’s export value to the US though increased to $8.3 million from $7.2million in the same period.

Recently, the tea Industry also advertised about its crisis and appealed to the government to come to its rescue. Kolkata-based India Tea Associations published an advertisement seeking attention for the ailing tea industry.

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