It is not the automobile sector alone that has been witnessing a slump. The textile sector in India is also facing a similar crisis. In the last one year, about 300 spinning and open-end mills have shut in the state of Tamil Nadu. Almost 1.2 lakh workers have been rendered jobless within a year.
Not all who lost their jobs were able to find alternative employment. A significant number are still struggling to make ends meet. In the April-June quarter, there was a steep drop in the export of cotton yarn [(-)34 per cent].
Of the over 600 spinning mills that shut down across the country till March, 2017, 225 were in Tamil Nadu.
Several spinning mills are on offer for sale, but considering they cost about Rs 500 to 1000 crore, there are no takers. All the equipment in these mills is gathering dust.
Many feel that the high state and Central taxes and levies are responsible for the poor performance of Indian yarn in the global market. Also, with the rising cost of raw materials and the import of yarn from Bangladesh, Sri Lanka and Indonesia, at lower prices, has adversely affected business. In fact, Indian mills suffered a loss of approx. Rs 20 – Rs 25 per kilogram.
All these factors put together caused hundreds of mills to close in India.
Only if some discount is offered in the state and Central taxes and levies for cotton and blended yarns, can the mills that are still operational hope to carry on.
The trade standoff between the US and China, as well as the free-trade agreement between China and Pakistan are also said to have contributed to this slump.