INDORE: Regional textile mills are losing on business triggering a drop in exports due to higher cost of operations and liquidity crunch.
Textile exports from the region have seen a drop of over 5 per cent for the past few months owning to limited cash flow and increased cost of operations.
“Power rate in the state is higher than Maharashtra and southern India giving manufacturers of that areas a competitive edge,” said Rajesh Chordiya, a textile manufacturer from Indore who produces about 50 lakh metre of cloth per annum.
Local textile mills said the cost of production goes high every year because of regular rise in power tariffs and labour wages.
Industrialists said other leading exporters get duty exemption for textile industries unlike India which leads to higher costing for Indian products.
Madhya Pradesh is the fifth largest cotton producing state in the country with the presence of over 50 textile mills and 200 ginning mills.
According to Federation of Indian Export Organisations (FIEO) export scenario looks bleak and unlikely to bounce back in coming months.
FIEO president Ganesh Kumar Gupta said, “Fund flow is a big challenge for exporters as they have not received refunds under Goods and Services Tax since past several months. Fresh export orders are not being singed up from foreign destinations.”
The government has initiated the refund for exporters but still the process is slow.
There are over 20 textile mills in Indore, Ujjain, Nagda and Khandwa, according to trade estimate.
Industry experts demanded that favourable trade policy for small and medium industries should be framed so that local industries can avail facilities.
They said in rival countries such as Bangladesh, Vietnam and China, governments give benefits to textile mills in the form of subsidy and power cost making their products competitive in the global market.
Source: timesofindia.indiatimes.com