Textile mills in Coimbatore are in dire straits with market pundits predicting that cotton prices are unlikely to fall until the next season that starts in October. The mills are taking desperate steps like reducing production and raising prices of hosiery yarn. Though the Tamil Nadu Government does not have a role to play in cotton pricing, they say that reducing taxes as per their earlier demands will go a long way in this situation.
Domestic cotton prices, especially the preferred Shankar-6 variety, have risen from 34,000 per candy (355 kg of cotton) in April to 49,000 per candy by July-end. According to India Ratings and Research, prices of cotton are unlikely to come down till October, when the new season begins for cotton. As a result, textile mills in the state, which account for 46 per cent of the spinning capacity in the country, preferred to bring down production by 15 per cent to 20 per cent, to at least cut their losses.