Textile mills in the southern region for the last six months are hit due to the market slowing down for yarn and prices remaining low, compared to the production cost. Further, textile units in the State also had to pay higher value added tax (five percent) compared to central sales tax (two percent) according to the South India Spinners’ Association.

Yarn made in other States and sold here was priced lower than the yarn made by the mills in the Tamil Nadu State.

Association president C. Varadarajan said that the mills are unable to repay the bank loans, and would be forced to shut down if the situation did not improve.

The Government should ensure that the textile mills had regular supply of the fibre. The mills were facing these problems because of lack of textile policy.

The Union and State Governments should come out with a textile policy for the growth of the sector, he added.

The number of mills that used polyester fibre was on the increase and there was shortage in the availability of the fibre and the supply of the fibre is not regular as only a few industries in the country manufactured polyester fibre and the mills were unable to import the fibre because of high import duty (23 per cent).