India’s Recession bites Textile Sector; Over 3 Crore People Face Job loss in Textile Industry

The Indian textile industry which currently accounts to employ around 10 crore people directly and indirectly and accounts for 2% of India’s Gross Domestic Product, is on the verge of huge job loss, which nobody has ever witnessed in last 10 years, claimed an apex body representing the industry.

According to The Northern India Textile Mills Association (NITMA) – an association of textile mills located in Northern India, textiles industry is facing the worst financial crisis and India’s economic slowdown, which has forced spinning mills and enterprises to completely shut down their production and shut down their mills.

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The Indian spinning industry is facing its biggest ever crisis. One third of the country’s spinning capacity is closed. Mills are currently incurring huge losses and the upcoming cotton crop of four crore bales is struggling to find buyers in India and abroad. The textile sector has witnessed big job cuts — over 25 lakh jobs — in the last decade.

“Indian spinning industry is facing the biggest crisis, resulting in huge job losses,” reads an advertisement which has been officially issued on behalf of NIMTA.

As per NITMA, apart from excess spinning capacity in past, poor demand for India yarn from International markets has been the major factors to the crisis. It also blamed “high interest rates” and “state and central taxes on export” for adding more burden and fuel to the crisis.

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Though India’s cotton-spinning industry has been struggling with profitability over the years, the recent spurt in cotton prices has added to the woes, claimed NIMTA.

Even the cotton ginning industry which is a supplier to textile mills is in the doldrums. For instance there were 422 ginning mills in Punjab in 2007 and the number has come down to 60. Nearly 40,000 workers were employed by ginning factories. In the last 12 years, 34,000 jobs have been lost.

The decline in exports in the first quarter of the current fiscal has come to haunt cotton growers. The 27 per cent increase in the minimum support price for cotton in India is making their produce internationally non competitive. Cotton in the international market is cheaper than in India. Farmers are worried that these trends will affect the market prices of cotton, the harvest for which will begin in the first week of September. Cotton has been sown over nearly 16 lakh hectares in the three states of Punjab, Haryana and Rajasthan.

Highlighting decline in the export, NIMTA said that during April-June period of this fiscal year, export of cotton yarn fell by 34.6% to $696 million as compared to $1,063 million in the same period last year.

We are consistently Seeking government’s intervention to prevent job losses, the industry body has pointed out key points –

That the slowdown resulted in closure of many mills – approximately one third of whole spinning capacity across India.
That textiles mills are incurring huge financial loss. Therefore, it is becoming difficult for them to buy and consume India cotton any more.
That upcoming cotton crop of about 40 million bales, which is valued at ₹80,000 crore, would not find buyer in domestic and overseas market as the Indian market was not market-driven since the government directly supports farmers with minimum support price (MSP) level.
Issuing an appeal, NIMTA sought help from the government to avoid the spinning sector from turning into non-performance assets (NPAs). Asking government for “rebate schemes” the industry body has also sought for “two years of moratorium” through the advertisement.

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