At least 12 spinning mills in and around Rajapalayam have faced closure in the last few years rendering few hundred employees jobless due to a slew of wrong economic policies of the Central government, says Communist Party of India (Marxist) functionary, B. Mariappan.
“Prices of cotton have been highly volatile and flooding of imported garments have affected the textile industry largely,” he told The Hindu.
There are 110 spinning mills in the Rajapalayam region, employing around one lakh workers directly and indirectly. The failure of Cotton Corporation of India in keeping the prices of cotton stable has taken a heavy toll on the industry. The very purpose of CCI was to keep the prices of cotton stable and supply it to the spinning mills. “But, selling the cotton to corporates which led to hoarding and rise in price of cotton has defeated the very purpose of the CCI,” he adds.
Since cotton is the only agricultural produce that attracts GST, high volatility in cotton prices has killed the competitiveness of the spinning mills.
The cotton bought on higher rate attracts huge GST. “But, by the time the cotton is turned into yarn, the price of cotton falls flat, making it a difficult proposition to sell it at a cheaper rate,” Mr. Mariappan says.
Ironically, even as the textile industry is suffering due to sluggish international demand, the government has allowed import of cheaper garments from countries such as China, Indonesia, Vietnam, Bangladesh and Sri Lanka.
“Imposition of anti-dumping duty would have saved the traditional textile industry that gives employment to lakhs of people. On the other hand, the imported cotton attracts higher import tax which is also working against the domestic textile industry,” he says.
Similarly, the higher tariff of electricity also adds to the woes of spinning mills.
“While few mills have closed down, some mills are operating only for four to five days a week due to lower demand,” says G. Ganesan, district president of Spinning Mills Workers Union affiliated to CITU.
Gone are the days when workers were forced to do overtime to meet the demand. “But, these units are running the mills only to keep the banks away from pouncing on them for getting back the loans,” says Mr. Mariappan.
The mill operators sought zero input tax on cotton to help the mills run smoothly. “This is not going to bring down the GST revenue for the government, but will certainly save the industry,” he says.
Similarly, the loans given by banks should have lower interest rate to help the industry remain afloat.
A whole lot of jobless workers have turned towards construction and farm sectors for thier livelihood. Those who have taken loans from self-help groups for women are the worst affected due to their inability to repay them on time., Mr. Mariappan says.
