Nationwide Spinning Mills went on one day strike on 23rd May, 2011

Spinning Mills demand restoration of Duty Drawback Incentive and DEPB Facility for Yarn Exports also Remove Excise Duty on Branded Garments.

More than 70 textile mills of the region located in Ludhiana, Samana, Dera-Bassi, Lalru Belt of Punjab and Baddi, Barootiwala and Nalagarh belt of Himachal Pradesh remained closed today as a part Nationwide protest of spinning mills against Government Policies.  It is estimated that more than 10 million kilos of yarn production was lost today.

The protest call was given by Confederation of Indian Textile Industries (CITI) which is a federation of regional associations, where Northern India Textile Mills Association (NITMA) is also a member. The loss to the industry for today’s strike is more than 200 crores.

In April last year, Government had withdrawn the Draw Back incentive on export of cotton yarns along with facility of Duty Entitlement Pass Book (DEPB). As if this was not sufficient to kill the spinning industry, Government had put a ceiling of 750 Million Kilos for yarn exports. With a result many yarn manufacturer exporters lost their committed buyers abroad.  These foreign buyers have now shifted their purchases to other countries.

In addition government levied an excise duty of 10.33% on braded garments. As per report, the sales of garments have slowed down with the result the off take of downstream textile units such as weaving and knitting industry supplying fabrics and spinning industry supplying yarns diminished.

Last October, government allowed 55 million bales of cotton for exports. That resulted into increase in the prices of cotton in the domestic markets. Since cotton is the main raw material for making yarns, margins on yarn sales became under pressure. Many Spinning mills made huge losses.  Now that cotton prices started falling down resulting into fall in yarns prices, whereas, Mills had purchased the cotton at previous high prices thus mills started making further losses. Simultaneously, demand of cotton yarn both in the domestic and Global markets slowed down, as of now. Spinning mills started building huge stocks of yarns, estimated 500 million kilos at present. This has put a dent into the working capital of the mills and it has become difficult for them to meet day to day expenses.

As per the decision of the CITI the mills will now curtail their production to 33% for a week that is the mills will run only one shift. This situation will be reviewed after a week.

It is hoped that government will concede to the demands of the textile industry and immediately restore Duty drawback and the facility of DEPB for yarn exports and that the ceiling of the yarns exports will not be resorted to again. Also the excise duty on the garments will be withdrawn with immediate effect. If these demands are not met with, many spinning units will close down rendering millions of workers unemployed.