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Agitating industry in Tamil Nadu

Last week, the various textile segments in the interior parts of Tamil Nadu showed agitating moods. Shops downed their shutters in Palladam and Somanur belts. The bundh was in response to the call given by opposition parties as also the trade unions to protest against the rise in the prices of yarn and the higher levels of Central excise duties. The bundh was observed by not only the textile shops, but the market as a whole.

In Erode, the traders agitated against the unbridled rise in the prices of yarn on the one side and on the other adverse impact of CENVAT and the indiscriminate exports of cotton. The Erode District Handloom Cloth Traders’ Association and the Federation of the Cloth Producers’ Association have warned of an intensified agitation if the Centre does not withdraw CENVAT. It has been planned to send a delegation to New Delhi to impress on the government the need for such a withdrawal at the earliest arising from cups of woes suffered by the textile interests. These bodies point out that because of CENVAT many small traders have left the business, while the producers have suspended their operation. This created unemployment problem and brought in an overall sickness in the industry, they alleged. Likewise, the Erode Garment Exporters Association wants the CENVAT to be withdrawn forthwith. It observed that CENVAT brought in stagnancy in the powerloom sector. Consequently, the exporters fear that they might not be able to fulfill their export obligations in time. At least, the Centre should simplify the CENVAT norms, it has stressed.

But, the problems of such exporters are much bigger. According to the Erode Association, despite the strong position of the rupee, the US importers have reduced the orders, but are searching for suppliers from other countries at lower costs. Usually, these importers placed orders in September for the following summer. The prices would be already quoted. The actual import would take place from October to February. In the current year, after the prices were quoted, there was a steep increase in the prices of yarn and so, this would eat into the margin of the exporters because, they are unable to recover it in the end price. If the exporters quote a higher price for the next season, the possibility is that these importers would go to other countries from where they could get the materials for a cheaper price. Another problem cited by the exporters is that since the cotton production was hit in China, it is importing cheaper cotton from India. In the bargain, with its lower wages, it is able to produce quality products at a lower cost. Consequently, it is posing a sever threat to India in the global garment market. In other words, by exporting cotton to China, it is creating its own competitor in the global market, the exporters allege. Meanwhile, the Textile Association of India (TAI) has urged the Centre to ban cotton export totally to save the textile industry from its present and protracted crisis. Recently, its Chairman, Mr M S Mathivanan said that at the International Home Textile exhibition held in Frankfurt, the Indian exporters could not quote prices at all because of the high fluctuation in the prices of yarn. So, he wanted the government to control the prices of yarn or set up a yarn bank or otherwise arrange for the supply of yarn at subsidised prices to the weavers.

The TAI has also demanded the withdrawal of CENVAT or hiking the turnover limit of powerloom unit holders under the CENVAT from the present Rs 25 lakh to Rs one crore. Another plea was to extend the norms relating to the import of second hand machinery under the Technology Upgradation Fund (TUF) from 10 years to 15 years. At the same time, last week, another highlight was the waning of the cotton market in Konganapuram area of Salem district. Against the usual strength of over 5,000 cotton farmers who used to participate in the auctions, last week only 2,000 took part. Arising from the lower participation, the cotton auctions have come down to once a week from thrice in the past. Farmers said that following drought and the high cost of production, many have abandoned cotton cultivation and switched over to other more remunerative crops. Added to this, more cotton is being imported from China and Pakistan, they alleged. This is one of the best cotton auction centres in the country, where the farmers have all facilities. The farmers have also generally appreciated the transparency and the trade practices like selling the cotton in open and not through closed gunny bags leading to better inspection. There is sufficient space to stock the cotton in as many as six godowns. Auction is conducted in the spacious four yards. The market also offers ginning facility. So, when the auctions are waning, it causes a lot of worries for the growers and the Centre as a whole. Besides, it sends wrong signals to the cotton growers elsewhere in the country. In effect, therefore, things were rather disturbing on the textile front of Tamil Nadu last week. Agitations, representations and canvassing took most of the time of the players in the industry. Little attention could, therefore, be put on by these segments to their hard core business requirements. One hopes, things change soon.

- P S Sundar