The hike in the price of diesel will sound death knell for the textile industry, says SIMA (Southern India Mills Association), which is the apex body of textile mills in the South.
SIMA Chairman S. Dinakaran , in a release, stated that though the price was increased by Rs 9.25 a litre, the net impact of the hike at the consuming end would work out to Rs 11.
Appealing to the powers that be for an immediate roll back of the hike, Dinakaran said, “this would further increase our production cost by Rs 4 a kg for the 40s count yarn apart from a substantial increase in indirect cost such as transportation and the like. Such cost escalation would have a cascading effect down the value chain in the textile industry.”
The industry is already in a disadvantageous position in the international market due to high cost of inputs, which is at least 20 per cent higher compared to countries such as Bangladesh. “We will, with this hike lose our competitive edge,” he said.
The SIMA chief said that the power generated out of diesel was already 100 per cent more when compared to the grid power. The industry is already facing a 12-14 hours cut in power every day. At this rate, production would come to a grinding halt with the diesel price hike, he added.
The industry, he said, has been pleading for the past several years for exemption from all the fuels meant for captive generation, from all fiscal levies till the country becomes self sufficient on the power front. “When the State Government seems to be actively considering the industry’s plea for VAT exemption for high speed diesel oil meant for captive power generation, this abnormal hike would sound a death knell for the textile industry,” reiterated Dinakaran.