The India Policy Has Led To The Entanglement Of The Textile Sector.

Since January of this year, the government of India banned cotton exports for three months, causing India textile and clothing industry.

In December last year, the Federal Ministry of textiles limited the export of cotton yarn to 720 million kilograms based on complaints from Rupp's knitting industry on the apparent shortage of yarn.

Because the yarn exports had already exceeded this threshold, there was almost no export yarn in the last three months of last year.

The price of cotton hoarded by the spinning mill during the first month of October (-9 month) was very high, partly because the government decided to export 5 million 500 thousand bales of cotton at the beginning of the year.

Their problems became more complicated in April, global commodity prices plummeted, yarn prices falling, and the government lifted the export ban.

Huge cotton inventory and inability to handle

Yarn enterprises are in a dilemma.

If they want to resume production, they will be forced to use cotton bought at a high price of 62000 rupees / candy in -11 October (thereafter the price fell to 38000 Rupees).

This may make the situation of these capital intensive enterprises worse. In recent years, they have used the textile renewal fund plan to invest in capacity expansion, and the textile renewal Fund Scheme (TUFS) is an interest subsidy scheme.

Unlike the power looms, the power looms enjoy labor flexibility while the spinning mills have no choice.

The result is that the mills are still struggling to deal with unsold stocks, because the global and domestic demand situation is not conducive to the consumption of high cost cotton.

In fact, the government began to suppress the yarn industry in April last year when the government abolished the rebate of yarn rebates DEPB.

The price of cotton fell to 40000 rupees / candy from 63000 rupees three months ago, said J Thulasidharan, chairman of the India Textile Mills Association (SIMA).

Although the government increased the export limit from 5 million 500 thousand to 6 million 500 thousand, the demand for yarn remained low.

He said that the government's refusal to restore the tax rebate for cotton yarn and the tax rebate bankbook scheme abolished in April last year made the situation worse.

Thulasidharan said that the spinning mills are in arrears with bank repayment, and they should be allowed to extend the loan for one year under the TUFS plan and the repayment time of other loans.

Shishir Jaipuria, chairman of the India Textile Industry Federation (CITI), said: the crisis in the spinning industry has spread to the fabric industry, and the fabric industry is also forced to hold unsold stocks.

Most looms have been shut down for weeks to solve the problem.

Because of the huge promise of debt service, it is not feasible to postpone the repayment time of the spinning industry for a year.

DK Nair, Secretary General of India Textile Industry Federation, said: last year, TUFS assistance was stopped unexpectedly, which affected the investment momentum of the textile industry.

The textile industry needs to extend the TUFS plan to the 12th Five-Year plan, and the government is now considering the 12th Five-Year plan.

The United States, Britain, Germany, France, Italy and Spain are major markets in India, accounting for 22 billion of the total share of textile and clothing exports.

Exports to these countries in 2010-11 years showed a negative growth.

Bangladesh is a major competitor in India in terms of clothing exports. Bangladesh enjoys preferential access in developed countries.

Faced with the slow recovery of pressure and demand, India garment exporters did not expand their exports in its traditionally lucrative market.

Insiders say it is wrong to prohibit the export of cotton yarn.

Because of insufficient demand and the government's erroneous policies, the spinning mills are suffering huge losses.

Efforts to revitalize the textile market begin with encouraging the expansion of fiber consumption. For this reason, the working capital status of textile enterprises must be improved from financing and cost aspects.

Some adjustments must be made in the payment of enterprise's term loan.