Spinning mills in Telangana which has been passing through a crisis is getting a major relief with the Telangana government’s decision to reduce the power tariff. The measure is expected to have a soothing effect on the sector as power charges comprise 20 to 30 per cent of the production cost, based on the quality of the yarn produced.
Industry sources said that apart from the crisis started over two years ago, it was peaking now with China devaluing its currency by 30 per cent recently to reduce imports of yarn and increase fabric production with the help of cotton/yarn purchased from India and other countries and stocked for the last five years. As a result, China threatens to control textile market as it has swayed over 80 per cent production
Spinning mills industry in India is impacted with China’s decision as the neighbouring country would cut down imports of yarn drastically. However, poor production of cotton last year has increased the cotton candy (weighing 356 kg each) rates, which had gone up to about Rs.44,000 from Rs.33,000 in a matter of two months.
According to the general secretary of the Telangana State Textile & Spinning Mills Association M. Anantha Reddy, increase in the price of candy cotton by Rs.40 to Rs.50 a kg has added to the problems of spinning mills. However, there’s no increase in the yarn prices since China has reduced imports considerably, leading to an imbalance in the economical working for the mills.
Local spinning mills and yarn traders were not in a position to go for purchases required for a year due to high interest rates, whereas some multinational companies were procuring cotton/yarn in huge quantities at minimum support price in the season and stocking it in India since they got working capital at cheap interest rates of three to four per cent.