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Trade Talk | October 2019

Textile bodies appeal for status quo on energy policies in TN

Tamil Nadu textile industry that accounts for one-third of the textile business, 47 per cent of the spinning capacity providing direct jobs to over 60 lakh people especially to rural masses and women folk and fetching Rs 60,000 crore as forex earnings, is the worst affected in the country under the current unprecedented recession due to raw material / finished goods transport cost and several other factors. Under these circumstances, the proposal of TANGEDCO to curtail certain lifeline benefits such as wind power banking, group captive power purchase by MSMEs for less than one MW, removal of old wind mills (repowering), etc., have come as a rude shock for the ailing textile industry in Tamil Nadu.

In a joint press meet held on September 23 by the National and Regional textile industry bodies viz., Confederation of Indian Textile Industry (CITI), Cotton Textiles Export Promotion Council (TEXPROCIL) and The Southern India Mills’ Association (SIMA), T Rajkumar, Chairman, CITI, Dr KV Srinivasan, Chairman, TEXPROCIL and Ashwin Chandran, Chairman, SIMA, have appealed to the Hon’ble Chief Minister to continue the existing energy benefits like wind power banking, group captive power purchase by MSMEs for less than one MW and removal of wind mills of over 25 years old to enable the textile industry in Tamil Nadu to remain competitive both for the domestic and international markets especially when most of the cotton growing States continue to offer 10 per cent to 15 per cent subsidies including Rs 1.5 per unit power subsidy even for the existing units.

Open access power for less than 1 MW: The Government of Tamil Nadu on April 17, 2018 issued a GO Ms.No.37 giving a direction to the Hon’ble TNERC to curtail the open access in the case of industrial units having less than 1 MW. There are more than 1500 MSME textile mills operating in Tamil Nadu and they are sourcing open access power either under group captive or through their own wind mills. If the open access is denied for the MSME textile mills, the textile industry in Tamil Nadu will not be able to survive and will lose the status of one-third of the textile business size in India. When the whole Indian economy is under stress, the restrictive move on the part of Government of Tamil Nadu for curtailing the open access for industrial units having less than 1 MW will affect more than 1,500 textile units. Therefore, it is appealed to kindly continue to extend the open access facility for industrial units of less than 1 MW.

Wind mills banking facility: In order to sustain the competitiveness both in the domestic and export markets, the textile mills in Tamil Nadu started making huge investments by erecting wind mills since 1986. The textile mills in the State survive mainly because of advantage in power cost due to installation of wind mills with the facility of banking so far. The Tamil Nadu Government encourages erection of wind mills by providing banking facility since 1990. The Tamil Nadu Electricity Regulatory Commission (TNERC) provided banking facility for the mills up to March 2020 and the TANGEDCO as per the Commission’s Order is charging 14 per cent of the wind energy as banking charges. TANGEDCO cannot incur any loss on account of banking facility. Hence, the banking facility may be continued and even if TANGEDCO is incurring any loss on this score, the industry has already assured that wind mills will compensate for the banking losses.

Removal of old wind mills/repowering: The textile industry has sizably invested in wind mills several years back as a result of which the power charges have considerably reduced for the textile mills in Tamil Nadu and they are able to compete in the domestic and export markets. While so, the recent instructions of TANGEDCO not to wheel and adjust the power generated by wind mills which served its life time of 20 to 25 years will have an adverse effect. Therefore, so long as the wind mills are having the stability and able to perform, it must be allowed to generate power without insisting for removal of those wind mills and erecting new wind mills in their place. Erection of new wind mills will involve huge capital which at present, the industry is not able to afford.

Remove 1% Agricultural Market Committee fee on cotton waste: The cotton textile mills in Tamil Nadu have been demanding for the removal of 1 per cent Agricultural Market Committee Fee levied on cotton waste for several years. Tamil Nadu produces only 5 to 6 lakh bales of cotton while the industry annually requires 120 lakh bales of cotton and source the same from upcountry and also through imports. There is no logic in levying Agricultural Market Committee Fee on the byproduct of cotton i.e., cotton waste. The Agricultural Market Committee does not render any service for the outsourced cotton and any waste produced out of the cotton. Further, no other State in the country levies such a Fee on the cotton waste. Therefore, it is requested to remove the 1 per cent Agricultural Market Committee Fee levied on cotton waste in the interest of the spinning, handloom and powerloom sectors.

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