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Updated At:Aug 02, 202306:34 AM (IST)

Work in progress at a spinning unit in Ludhiana on Tuesday. TRIBUNE PHOTO: HIMANSHU MAHAJAN

Tribune News Service

Nitin Jain

Ludhiana, August 1

The spinning industry of Ludhiana is in dire straits, courtesy government policies.

One of the biggest employment generators with over 1.5 lakh employees working at around 60 units, the trade has an annual turnover of over Rs 28,000 crore, which comprised almost Rs 7,000 crore of export sales.

Committed to promoting industry: CM

“We are committed to promoting industry and attract fresh investment in the state. Genuine issues will be resolved on a priority basis and best environment and opportunities will be provided for the uplift of trade.” – Bhagwant Mann, CM

With a total installed spindleage of 42 lakh spindles producing yarn worth over Rs 28,000 crore every year, the spinning industry, having 10 large scale units and rest 50 MSMEs, in the industrial and business hub of the North, employs more than 1.5 lakh persons directly, besides providing indirect employment to almost 3 lakh people.

Industry at a glance

Units 60 | Large 10 | MSMEs 50

Annual turnover Rs 28,000 cr

Export sales Rs 7,000 cr

Direct employment 1.5 lakh

Indirect employment 3 lakh

Main products: Cotton, poly/ cotton yarn | Polyester spun yarn

Main issues: Duty on raw cotton, zero duty clearance of polyester spun yarn under ASEAN FTA, inverted duty structure on MMF fibre and yarn stage, delay in implementation of BIS standards on polyester spun yarn, other polyester filament yarns, and 10 per cent hike in power tariff.

Even as the spinning industry plays the key role in the financial and economic growth of the city and the entire region as well, the trade is passing through a major crisis primarily due to duty and tax anomalies, leading industrialists have said.

Mainly producing cotton yarn, polyester spun yarn and poly/cotton yarn, Ludhiana’s spinning industry exports goods worth almost Rs 7,000 crore every year to various countries while its domestic business spans not less than Rs 21,000 crore per annum.

Aggrieved over what they allege as a raw deal by the government, several industrialists were in talks with other states and UTs to explore shifting or expanding their businesses outside.

Gagan Khanna, chairman, Arisudana Spinning Mills Limited, told The Tribune, here on Tuesday, that under the inverted duty structure on MMF chain, raw material, including viscose and polyester staple fibre, is taxed at 18 per cent whereas the yarn is taxed at 12 per cent, which creates huge accumulation of GST refunds, leading to blockage of working capital, inability to take GST credit on capital goods, besides time-consuming and cumbersome process for taking refunds.

“All this adds to the cost of the final product, thereby making imports more competitive against domestic products,” he reasoned while seeking reduction of GST on raw material, including viscose and polyester staple fibre to 12 per cent from the existing 18 per cent, resulting in zero revenue loss to the government.

Highlighting another anomaly affecting the industry, Khanna said the raw material — polyester staple fibre – was not included in the ASEAN FTA and thereby imported at fully duty rate of 5.5 per cent whereas the polyester spun yarn was included in the FTA and was cleared at zero duty.

“It gives no chance for domestic producers to compete with the finished goods,” the leading industrialist said while suggesting removal of polyester spun yarn from the ASEAN FTA or alternatively addition of polyester staple fibre in the FTA.

Kamal Oswal, vice-chairman, Nahar Group, said since October 2021, the government had levied 11 per cent import duty on imports of raw cotton, which had made the entire Indian cotton spinning industry unviable.

“As over 50 per cent of the cotton grown in the country is exported in yarn, fabric or apparel form, this chain was viable only till Indian cotton was available at fair prices, which is around 3 to 4 per cent lower than ICE futures price, as Indian cotton has higher trash, short fibre and contamination,” he said.

Oswal said since the introduction of this duty, the domestic prices were on average higher than ICE future prices by 10 per cent, which had led to huge decline in exports, resulting in closing of spinning mills leading to loss of employment and export revenue.

Seeking removal of 11 per cent import duty on raw cotton introduced in October 2021, the industrialists said the BIS standard on polyester spun yarn (IS 17265) had been repeatedly postponed and the next date for the implementation of the same has been fixed as October 5.

“We urge the government to not give any further extensions so as to prevent low quality material being produced and sold in the markets,” the spinning industry asserted while demanding that no further extension should be granted in enforcement of IS 17265.

Industry reaches out to MP

The leading industrialists have reached out to Rajya Sabha MP from Ludhiana Sanjeev Arora to take up their issues with the government and help their resolution to sustain the existing industry and attract more fresh investment in the textile sector. Arora has assured industry leaders to impress upon the government to resolve genuine problems at the earliest.

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The Tribune, now published from Chandigarh, started publication on February 2, 1881, in Lahore (now in Pakistan). It was started by Sardar Dyal Singh Majithia, a public-spirited philanthropist, and is run by a trust comprising four eminent persons as trustees.

The Tribune, the largest selling English daily in North India, publishes news and views without any bias or prejudice of any kind. Restraint and moderation, rather than agitational language and partisanship, are the hallmarks of the newspaper. It is an independent newspaper in the real sense of the term.

The Tribune has two sister publications, Punjabi Tribune (in Punjabi) and Dainik Tribune (in Hindi).

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