September 24, 2022
  • September 24, 2022

Electricity tariff hike to hurt India’s Tamil Nadu textile industry

By on September 15, 2022 0
The textile industry in the southern Indian state of Tamil Nadu, which is already facing challenges due to more expensive raw materials and falling export demand, will now have to prepare for another challenge as the state government increased the electricity tariff. Rising electricity costs will increase the production costs of spinning mills and knitwear factories.

The approximate increase in net electricity tariffs for the textile industry amounts to ₹1 per unit. Since making 1 kg yarn requires an average of 5 units of energy, the cost of production will increase by ₹5 per kg, according to the Southern India Mills Association (SIMA). Thus, for a spinning mill having 25,000 spindles, the increase in electricity tariff per year would be around ₹1.2 crore.

The textile industry in the southern Indian state of Tamil Nadu, which is already facing challenges due to more expensive raw materials and falling export demand, will now have to prepare for another challenge as the state government increased the electricity tariff. Rising electricity costs will increase the production costs of spinning mills and knitwear factories.

“This will affect the competitiveness of downstream sectors such as looms, looms, garments and garments which are already speaking out against any increase in the price of yarn,” SIMA President Ravi Sam said. , in a communication sent to the media.

Compared to commodity-rich states (cotton and synthetic fibers) like Gujarat and Maharashtra, Tamil Nadu-based units are already uncompetitive and unable to make significant investments in modernization, capacity expansion and greenfield projects, says the communication.

Separately, the Tiruppur Exporters Association (TEA) said that the knitwear sector is already affected due to various unfavorable factors such as rising yarn prices and the Russian-Ukrainian war which has reduced the power purchases by European consumers. As a result, export orders to Tiruppur’s hosiery sector have dropped significantly. A similar situation prevails in the US market also due to the high inflation there.

Stating that micro and small units are neither able to absorb rising electricity tariffs nor pass them on to overseas buyers, TEA Chairman Raja M Shanmugham warned that the combined negative factors could jeopardize the survival of the units and could result in the loss of jobs for those who work in these factories.

SIMA and TEA appealed to Chief Minister MK Stalin to reduce electricity tariffs to save the state’s textile industry.

Fibre2Fashion (KUL) News Desk