Tamil Nadu, a main hub for textile business on the global map, accounts for one-third of the textile business in the country. Textile mills in the State account for 44 per cent of the total spinning capacity of the country and 60 per cent of its yarn exports. Altogether, mills in the State earn total foreign exchange worth over Rs. 75,000 crores.
The Tamil Nadu textile industry provides direct employment for over 50 lakh people. The livelihood of several crores of cotton farmers all over the country, survival of the powerloom, handloom and garment segments and that of the Tirupur knitting and garmenting sectors, which account for 70 per cent of the total cotton knitted garments produced in the country, depend upon the competitiveness of textile mills in the State.
The textile industry in Tamil Nadu started facing crisis since 2008 due to acute power shortage and steep increase in the fuel and transport costs. The global recession of 2008-2009 and the high volatility in cotton prices in 2010-11 added to the woes. The various incentives offered by States like Gujarat, Maharashtra, Madhya Pradesh, etc., in their textile policies, have made the textile sector in Tamil Nadu uncompetitive not only in the domestic but also in the global market.
In these circumstances, a press release issued, Mr. T. Rajkumar, Chairman, Southern India Mills’ Association (SIMA), said that Tamil Nadu produces only five to six lakh bales of cotton per year against its annual requirement of 120 lakh bales. At the same time, Gujarat, which has 2.75 million spindles, consumes only around 15 lakh bales of cotton a year out of its annual production of over 100 lakh bales. To fill the gap in supply and demand, Tamil Nadu mills procure over 100 lakh bales of cotton from other States, especially from Gujarat and Maharashtra.
With the steep increase in lorry freight, transportation of cotton by road has become unviable. The current lorry freight fare for transporting cotton from Gujarat to Tamil Nadu is Rs. 865/bale (of 170 kg). Indian vessels charge Rs. 672/bale for transporting cotton from Gujarat to Tamil Nadu, which is higher than the fare of Rs. 433/bale for transporting cotton from West Africa to Tamil Nadu. Currently, mills are spending Rs. 85,000 to transport 100 bales of 170 kg by lorry from Gujarat to Tamil Nadu, which works out to around Rs. 5.30/kg, whereas China is able to transport 150 bales of cotton per 40 ft. container from Gujarat to Shanghai at $100 to $350, using empty cargo vessels returning in the same route.
Mr. Rajkumar said that, for the last four years, SIMA has been urging the Union Government directly and also through the Confederation of Indian Textile Industry (CITI) and the Cotton Textiles Export Promotion Council (Texprocil) to relax the Cabotage Rule and permit foreign flag vessels to transport cotton and textile goods in EXIM container from the Gujarat port to either Tuticorin or Cochin port, so that the freight charge could be reduced by 50 per cent of the existing cost.
SIMA has thanked both the Prime Minister and the Minister of State for Textiles for considering its long-pending appeal for relaxing the Cabotage Rule and directing the Director-General (Shipping) to find a solution.
DG Shipping convened the first meeting of stakeholders on December 11, 2014, at which the Indian National Shipowners’ Association (INSA), SIMA, CITI, Texprocil, the Cotton Association of India (CAI) and the Textile Commissioner deliberated the issue. It was decided at the meeting to have mutual discussion between SIMA and INSA for an understanding to make domestic coastal shipping cost effective, as relaxation of the Cabotage Rule would affect the Indian shipping industry.
Accordingly, both SIMA and INSA members had a series of meetings at Mumbai and Coimbatore. They met thrice in the last two months and fully realised the needs and problems faced. It was learnt at the last meeting held on January 30 that certain local issues faced by the Indian shippers, such as duty on bunkers consumed and other taxes which are not applicable on a foreign shipping company, together with strict norms for coastal shipping, were the root causes for the higher cost of transportation for shippers.
As decided, a joint memorandum was sent to the Minister for Shipping and the Minister of State for Textiles on February 17 seeking certain concessions and relaxation in the forthcoming Budget for Indian shippers so as to bring down the cost of cotton transport on par with that of foreign shippers. The Ministers were also urged to provide duty-free bunkers for Indian flag vessels for carrying cotton and textile products on Indian coasts.
The SIMA chief also said that issues pertaining to restriction of the number of moves in ports (Tuticorin) and other port-related issues, which could be an impediment to the success of the joint efforts, would also need an intervention of the Shipping Ministry. SIMA supports the INSA demand to remove such restrictions, so that greater efficiencies are achieved at the port, which can translate into better logistics services for the SIMA members.
SIMA and INSA have jointly appealed to the Centre to take a favourable decision to make cost-effective transportation of cotton and textile goods possible among Gujarat, Maharahstra, Tamil Nadu, Andhra Pradesh and Telangana, the hubs for cotton and cotton textile goods manufacturing, to sustain their global competitiveness.
Mr. Rajkumar has also stressed that a right decision in this direction would make the “Make in India” programme of the Prime Minister a reality by enabling both the shipping and textile industries play a greater role.