Textile Mills in Tamil Nadu Are Struggling Despite Several Obstacles
Textile factories in Tamil Nadu are grappling with severe challenges, including declining demand, high electricity costs, and elevated raw material prices, which have persisted for nearly two years. To prevent losing market share to competitors from other states, the industry is urging both Central and State Governments to intervene and address these issues.
Tamil Nadu, home to 24 million spindles across 2,100 textile mills, has seen a significant decline in production. Over the past two years, more than 500 mills have shut down, and 1,000 others are operating at reduced capacity.
Ravi Sam, a former president of the Southern India Mills’ Association (SIMA), highlighted that yarn from states like Madhya Pradesh, Gujarat, Maharashtra, and Odisha is priced Rs. 20 to Rs. 25 per kilogram lower than Tamil Nadu's yarn, making it difficult for the state's mills to compete.
A. Sakthivel, honorary chairman of the Tiruppur Exporters’ Association, noted that Tiruppur's knitwear units have started sourcing yarn from mills in other states due to more competitive pricing.
S.K. Sundararaman, SIMA's current chairman, explained that Tamil Nadu mills produce various types and quality levels of yarn. However, the hosiery yarn market, crucial to Tiruppur's knitwear industry, is being lost to mills in other states. He suggested that Tamil Nadu’s mills need to shift to producing higher count yarn, invest in integrated plants, add value, or secure nominations from garment buyers.
Additionally, states like Gujarat, Madhya Pradesh, and Odisha offer attractive packages, significantly impacting Tamil Nadu’s mills. As Tamil Nadu cannot produce enough cotton, mills are forced to import from other states, adding Rs. 8 to Rs. 10 per kilogram to the cost. This, coupled with subsidies in other states for power, capital investment, and talent development, has further eroded the competitiveness of Tamil Nadu’s mills.
Industry experts recommend that Tamil Nadu focus on increasing the production of extra long staple cotton and consider providing some form of electricity subsidy to its mills. They also suggest that the Central Government should lower import duties on cotton and relax Quality Control Orders to help MSME textile mills remain competitive.
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