Spinning mills in Gujarat are foreseeing a significant cut in production because of reduction in demand for cotton yarn in the international market and have already reduced their production by 15 per cent, according to the All Gujarat Spinners’ Association (AGSA). A further decline in production is expected if the situation does not improve.
According to AGSA President Saurin Parikh, Gujarat mills export 30 per cent of their total cotton yarn production, while the rest is supplied to the domestic market. With the ongoing US-China trade war, Chinese fabric and garment manufacturers are facing a huge inventory pile-up, because their garment exports to the United States have declined. As a consequence, the demand for cotton yarn in the international market has gone down, he said.
The demand for apparel and fabrics has been hit in the domestic market as well, and as a result, weavers have also gradually started reducing their yarn inventory, according to a report. Weavers used to keep enough inventory of cotton yarn a year ago to last at least three months, which has now reduced to 15 days. With this, domestic demand has also taken a hit, Parikh explained.
Gujarat has a total installed capacity of some 52 lakh spindles across all the spinning mills, of which more than 7 lakh spindles are lying idle, AGSA estimates. Production cut has already started hurting export revenues to the industry. Poor demand has adversely affected revenues and in the past two-three months, cotton yarn exports went down by 22 per cent, said AGSA Chairman Bharat Boghra.