SIMA's Appeal To Govt

The Southern India Mills’ Association has appealed to the Union Government to restore the duty drawback rates that existed prior to September 1 for cotton yarn. Association chairman K.V. Srinivasan has said in a release that the recent announcement of the Government, reducing the duty drawback rates for textile exports, had added fuel to the fire as the industry was in a crisis. The Government had brought down the drawback rates for grey cotton yarn to four per cent with a value cap of Rs. 8 a kg from six per cent with a value cap of Rs. 12 a kg for counts below 60s and 9.5 per cent and Rs. 28 a kg for counts of 60s and above 60s.

Competing countries such as China and Pakistan had increased their export incentive by four to six per cent to sustain their market share in the global market. Though the drawback on export of cotton was abolished and the Centre had taken steps to create a level-playing field, the impact on cotton prices was short-lived. Since October 2007, cotton prices had shot up by 41.6 per cent and 58.9 per cent in the case of medium and long-staple varieties respectively. Meanwhile, the Government had also announced revising the Minimum Support Price for cotton for the coming season.

Further, the mills in the southern States were facing severe power shortage, the mills in Tamil Nadu had lost nearly 40 per cent production. Mr. Srinivasan appealed to the Centre to reclassify the count groups for cotton yarn and restore the drawback rates to the levels that existed before September 1. He added, “in the absence of adequate relief measures the textile industry, which is the second largest employment provider in the country, will soon lead to closure of several units.”

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