China may buy lesser quantities of cotton yarn this fiscal, slowing down the good run that Indian spinning mills had last year.
Recovering from a rough patch in the previous few years, spinning mills across the country wove healthier balance sheets last fiscal with a surge in demand in the Chinese market.
Idle mills sprang to life across the southern States, boosted by healthy cotton production and the government’s decision to make yarn export eligible for benefits under the Incremental Export Incentivisation Scheme for 2013-14.
In Gujarat, 80 new spinning mills with a capacity of two million spindles are coming up, especially boosted by the interest subvention announced by the State Government to boost industrial growth.
Direct yarn export touched about 1,500 million kg during the year, up from 1,107 million kg in the previous year. For four years since 2008, mills across India had been going through hard times, battling global slowdown, volatility in cotton prices and a squeeze on power availability, especially in Tamil Nadu and Andhra Pradesh. During this period about 380 mills closed down, with Tamil Nadu and Gujarat accounting for about 70 per cent of this.
Alternative markets “This year we expect China to import lesser yarn, which means we will have to look for alternative markets,” G Punnaiah Chowdary, President of Andhra Pradesh Spinning Mills Association, said.
Like elsewhere, some non-operative mills in erstwhile Andhra Pradesh also started operations. Today, Andhra Pradesh has about 100 mills, while its neighbour Telangana another 60. However, the new State produces 5 million bales of cotton, while Andhra Pradesh brings out 1.5 million bales every year.
In addition to shrinkage in the Chinese market, mills in the two States will have to bear power shortage and higher tariffs this year too. Power bills had doubled in the last three years — while mills in the combined State had paid ₹3 per unit in 2010-11. Last year they had to cough out ₹6.10 per unit on 33 KV.