TN: Manchester of South India on 15-Day Strike as Cotton and Yarn Prices Spike

The Manchester of South India is facing frequent troubles, and the entrepreneurs in the textile sector have been on a 15-day strike since May 22. The spiralling cost of cotton and yarn has intensified the problems faced by the micro, medium and small entrepreneurs (MSME) in Tirupur and Coimbatore districts, known as India’s textile hub, along with neighbouring districts including Karur, Erode, Salem and Namakkal. The skilled workers depending on the textile industry also face an existential crisis.

Around 80% of the spinning and power looms belong to MSMEs, while 90% of the manufacturers fall in this sector. The entrepreneurs and workers union allege that the export and import policies of the Union government were the primary reason behind the price rise.

The role of the trading companies in hoarding the raw materials and creating an artificial shortage is further intensifying the problems of the textile industry. The exporters and manufacturers have demanded the Union government supply cotton and yarn directly to the spinners through the Cotton Corporation of India (CCI) to avoid speculative trading.

The Rs 60,000-crores worth garment industry, including both the domestic and export markets, is facing a crisis unheard of, but the reactions of the Union government remain mundane.

ARTIFICIAL SHORTAGE AND SPIRALLING PRICES

The price of cotton has more than doubled from Rs 200 around a year and a half to Rs 460 now. The small-scale spinners and power loom owners who stock raw materials for about six months are unable to bear the steep hike in prices.

“Around 10% in the spinning industry are corporate companies, which have the capacity to stock raw materials for about two years and above. The small spinners and power loom owners cannot follow suit due to their limitations. This is severely affecting and threatening the very survival of the industry,” said M P Muthurathinam, president of the Tirupur Exporters and Manufacturers Association (TEAMA), while speaking to NewsClick.

The power looms are working only for two days a week due to the shortage of raw materials, affecting the entrepreneurs and workers. Both the stakeholders point fingers at the massive hoarding of cotton and yarn by traders.

“The speculative trading has made the traders keep a check on the price of the raw materials. If this is not addressed, the textile industry will suffer a massive setback shortly. The Union government must ensure direct supply of cotton and yarn to the spinners through the CCI,” said the TEAMA president.

Tamil Nadu is the leader in the textile sector, with a share of one-third of the business in the country. This also implies that the impact on employment and foreign exchange will also be massive. The state is home to around 2,000 of the 3,500 spinning mills, 5.6 lakh of 24.8 lakh power looms, and 1.5 lakh of the total 23.5 lakh handlooms across the country.

POLICIES AFFECTING MSME

The export and import policies of the Union government led by the Bharatiya Janata Party (BJP) are also badly hurting the industry. India is the largest cotton producer and still suffering from a cotton shortage, which exposes the problems in policymaking.

“The government has made the export of cotton tax-free while imposing taxes on the imports. This is highly unacceptable. There is a need for policy change to understand the problems of the Indian manufacturers and the industry. Unfortunately, a few corporate companies are dictating the terms,” said Muthurathinam.

Echoing similar views, the Centre of Indian Trade Unions (CITU) has called for a relook into the policies of the BJP-led Union government.

“It is rare for entrepreneurs to strike at work. But the entrepreneurs calling for a 15-day strike summarises the state of the textile industry. A two-day strike was also held earlier by fabric makers in May itself. The policies on export and import need a relook to save the industry and lakhs of workers depending on it,” said Krishnamoorthy, Coimbatore district secretary of the CITU.

The industry suffered similar issues in the prices of yarn and cotton when the United States banned Chinese cotton in November 2021. The government of India remained a silent spectator, with the Union minister of textiles refusing to intervene.

BAN COTTON EXPORT

The TEAMA has also called for a temporary ban on yarn and cotton export until the crisis is addressed. The organisation referred to the recent ban on wheat export by the Union government as the shortage has increased.

“The government must ban cotton export at least for one year to bring back things to normal and ensure the farmers are saved by procuring cotton directly and selling to the spinners utilising the service of the CCI. Only then the industry can be saved,” Muthurathinam said.

The association has also pointed out that garment export instead of raw cotton export is a better revenue generation model.

“A finished good export will help in increasing employment and get better foreign exchange. The demand for cotton garments in India is reducing since it has become a thing for the elite but was once used by common people,” Muthurathinam said.

Though the price of cotton is increasing in the market, the farmers as usual are not the beneficiaries. Cotton production has reduced as most farmers have shifted to other cultivations due to the alleged lack of support from the government.

The entrepreneurs and workers both accuse the BJP government of framing policies favouring the corporates, leaving behind the struggling MSMEs and workers to fend for themselves