Indian textile industry will reduce production indefinitely
Indian spinning companies have decided to cut production by one-third starting from May 24, aiming to reduce the backlog of more than 500 million kilograms of yarn inventory in factories. However, by the end of May, they again decided to extend the production cuts for two weeks, as yarn stocks improved only slightly.
However, Dr Selvaraju, secretary-general of the South India Textile Mills Association (SIMA), said: “The production reduction is not just for two weeks, but indefinite until stocks return to normal conditions. The current situation is very bad. Textile mills have suffered huge losses. The inventory has not been cleared yet.”
He said: “Domestic as well as export demand is still not back to normal levels. Domestic consumption, usually about 210 million kg, is now about 150 million kg. It is almost 60 million kg less, mainly due to pollution in Tirupur and ERODE areas Question.”
He continued: “According to the current production in China, yarn exports should be 100 million kilograms, but now it is about 50-55 million kilograms, mainly due to the suspension of exports for about 2-3 months.
“The market is very thin. Many countries and buyers are reluctant to sign contracts with Indian yarn manufacturers. Domestic buyers are also proposing many payment terms. All spinning mills hold high-cost cotton stocks. During the peak season, The price of cotton is about 63,000 rupees/candy (356 kg), and has since fallen 33%.
“Due to these factors, the government has increased the cotton export quota from 5.5 million bales to 6.5 million bales (170 kg), which will lead to a shortage of cotton. According to previous assessments, the ending stock was 2.75 million bales, which means that the inventory – The to-to-use ratio is only about 10%, while in China and other countries, the inventory-to-to-use ratio is about 40-50%.
“The government recently decided to increase the export quota by 1 million bales. As a result, hundreds of spinning mills will be forced to close in August, September and October until they get new cotton. The government decided to increase the export quota by 1 million bales. quota, because cotton production is expected to reach 33.9 million bales. However, the recent estimate made by the Cotton Advisory Committee after collecting information from various states shows that the production is at 30.9 million bales.
He concluded: “Today cotton merchants hold about 1.5 million bales of cotton. They plan to export it and do not plan to sell it to domestic spinning mills. Farmers have sold out the cotton in their hands, and now only cotton merchants have cotton. Therefore, expanding export policies will not benefit a single farmer.”
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