6th October 2023
SIMA appeals Tamil Nadu Chief Minister to strengthen the proactive measures to sustain the competitiveness of the textile industry in the State
The Textiles and Clothing (T&C) industry is the backbone for the Tamil Nadu economy as the State accounts 1/3rd of the Textile business of the country providing direct jobs to over 60 lakh people in the State besides fetching Rs.75,000 crore forex earnings and GST revenue to the tune of Rs.5,000 crores for the Government. The global recession is still ruling high due to various issues including the war between Russia and Ukraine, leading to shrinkage of the buying capacities of foreign consumers, thus impacting the volume of export Orders. Factors like non-availability of quality cotton in required quantities, 11% import duty on cotton, high volatility in cotton price during the last two years and enforcement of Quality Control Orders for Synthetic/manmade Fibre raw material (PTA and MEG), fibres and filament/spun yarn are affecting the operations of the textile industry, forcing the textile manufactures to cut down their production rate significantly, specifically during the past one year, consequently eroding the global competitiveness and working capital of the spinning segment.
Tamil Nadu is gearing up to host its flagship event, the Tamil Nadu Global Investors Meet 2024 (GIM 2024), a means to establish Tamil Nadu as a USD 1 trillion economy by 2030. Tamilnadu has been the most attractive destination for new investments mainly due to its unique energy policies relating to wind power, open access power, third party power etc., thus making the power intensive sectors like textiles to remain competitive when compared to any other States in the country. To achieve the growth, strengthening the policy initiatives already implemented by the State Government is necessitated. In the recent period, huge incentives were offered to textile sector by the States like Maharashtra, Gujarat, Madhya Pradesh, Telangana, etc., by way of capital subsidy upto 45% with a cap of Rs.250 crores, power subsidy of Rs.3.77 per unit, exemption of open access power from cross subsidy and additional surcharges, etc. Since power cost accounts over 45% of the manufacturing cost on textile industry, it has become a governing factor for any textile unit to sustain its viability, make investments in modernization, expansion and green field projects. The wind power banking with nominal cost has been the major attraction of Tamil Nadu. It is a myth that TANGEDCO incurs loss due to banking as the captive consumers not only compensate all the losses on account of banking, but also provide scientific data relating to wind forecast and its profitability and thereby drastically reduced the hardships of TANGEDCO. The life of wind turbines generators is estimated at 25 years for the purpose of determining the wind tariff while TANGEDCO has taken a decision to discontinue only banking facility and also advocating repowering of old windmills. The MNRE is bringing out the fitness certification process soon.
Out of 15 million spindles of over 20 years old capacity in the country, Tamilnadu has 12 million spindles that accounts almost 60% of the total capacity. Unless otherwise appropriate policies are announced or atleast roll back the power tariff to the level that existed prior to the recent tariff revision, most of the textile mills in Tamilnadu will be closed in few years. Already several hundreds of textile units are under SMA1, SMA2 and NPA accounts.
Textile industry was attracting over 60% of the investments made in the country till 2007 mainly due to the power cost advantage. The industry started losing its competitiveness from 2008 when the acute power shortage prevailed during 2008-2012 and thereafter, the industry has become uncompetitive, not only due to power cost, but also steep increase in the transport cost for sourcing entire raw material from the States like Gujarat and Maharashtra and also selling over 40% of the yarns and fabrics again in the upcountry markets. Therefore, it has become essential for the Government of Tamilnadu to have a re-look at the policies relating to the textile industry, particularly the power tariff to sustain the survival of the textile industry in Tamilnadu.
In a Press Release issued here today, Dr. S.K. Sundararaman, Chairman, The Southern India Mills’ Association (SIMA) has appealed to the Hon’ble Chief Minister of Tamil Nadu, Mr. M.K. Stalin to have a re-look at the prevailing energy policy especially the annual banking facility extended to the wind mills of 20 / 25 years old and network charges levied for roof top solar panel. SIMA Chairman, while appreciating Hon’ble Chief Minister’s efforts to persuade the Union Government to address issues relating to cotton import duty, MMF quality control order issue, etc., he has appealed to the Hon’ble Chief Minister to extend/implement the annual banking facility to the windmills of 20 / 25 years old and keep the repowering policy in abeyance under the current scenario and make the same as optional in due course, considering the numerous challenges and the need to sustain the competitiveness of captive consumers of such wind power.