Andhra Pradesh state government is contemplating to drastically slash power tariff to spinning mills in the state to revive the sagging morale of textile industry. As the spinning mills provide employment to four lakh people in the state, but several mills are on the verge of closure due to heavy losses.

A cabinet sub-committee headed by finance minister Yanamala Ramakrishnudu has formally moved a proposal to offer power at Rs 2 per unit to the spinning mills. The committee comprising rural development minister Ch Ayyanna Patrudu, transport minister Sidda Raghava Rao and the FM discussed the issue recently. The committee met after managements of spinning mills met chief minister Chandrababu Naidu and urged him to bail out the industry from the crisis.

The finance minister said that the new tariff, if implemented, would cause a burden of Rs 400 crore on the exchequer. Since lakhs of cotton farmers and workers depend on the survival of the textile industry, the committee is recommending the proposal to lower the power tariff. The cabinet will take a final call on the issue.

According to the AP Spinning Mills Association leaders, the main reason for this unusual increase of cotton price is due to allowing multi-national and local trading companies by Cotton Corporation of India (CCI) to participate in daily auction along with the spinning industry.

The price of cotton has increased from Rs 35,000 to Rs 48,000 a candy (356 kg) and is racing towards Rs 50,000 mark. But the yarn rate is not increasing commensurate with the increased cotton price. With deep parity in yarn production and marketing cost, the industry is losing heavily from Rs 25 to Rs 30 per kg, said industry representative K Anjaneyulu.

The committee has also decided to recommend to the government to allow the ferro alloy industries to clear debts in two years. The FM said that these industries owe Rs 300 crore to the power distribution companies.