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A steep decline in yarn prices has sounded the death knell to about 2,000 of the about 10,000 power looms in Erode and surrounding areas in the last three days, with the danger of many more following suit, according to a senior official of Erode Powerloom Owners Association.
The city is noted nationwide for its power loom production and about 10,000 and odd powerlooms function in Veerappanchatram, Surampatty and some other places.
Association President Subramaniam said more than 2000 powerlooms was closed within three days as yarn price was decreasing every day. Most powerloom owners had got a good number of orders from textile merchants when yarn price was Rs 215 a kg of 40 number count. But for the past one week the price had decreased and was selling at Rs 180 a kg, he said.
He said many powerloom owners had procured huge quantity of cloth, but those who gave orders were now demanding that the price be reduced by Rs three a meter, which was impossible as production cost was high.
"Under such circumstances it has forced us to close down shutters of 2,000 powerlooms and within a week's time the remaining 8,000 looms will also be closed if the price continues to go down," he said.
N Sivanesan, Chairman, Federation of All Traders and Industries Association said cotton price was Rs 52,000 a bale (172 kg) some months back and started declining slowly. Today it is available at Rs 46,000 to Rs 48,000 a bale. New cotton crop would arrive for sale in December when it is expected to be available at Rs 40,000 a bale.
"Such a drastic fall in price will certainly affect the yarn and cloth producers", he said
He also wanted the Textile Ministry to take steps to maintain stability of cotton and yarn prices, for which they should instruct to fix a price for one month. If there was poor or high demand the price could be changed after 30 days. If this was done, textile producers would be benefited.
Powerloom producers said they have more than Rs 10 crore power loom cloth with them. They also said powerloom owners could not provide full wages to their weavers and others in the industry due to demonetisation.
Sivanesan wanted the Government to allow powerloom owners to draw sufficient funds from their bank accounts to purchase yarn and also provide wages to their workers.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)