A good yarn

On Monday,the 3,000 mills that spin cotton in India shut their doors for a day,taking a Rs 200 crore hit. On Tuesday they reopened,but will produce only two-thirds of their usual output. What has caused India’s cotton spinning industry to take these drastic measures?

The answer is,unfortunately,the consistent short-sightedness of government policy,framed to suit textile producers at the expense of absolutely everything else. Textile manufacturers want cheap cotton; and so,when the price of cotton went up by a bit a few months ago,they demanded that exports be shut down. The government dutifully clicked its heels and restricted the export of cotton yarn. As this newspaper argued at the time,this was the wrong approach. It is hard to reverse; and it feeds a dependence on government policy on the part of India’s textile industry,rather than on market-driven efficiency. So it has proved. The price of cotton has fallen since; cotton exports crashed; and,consequently,the mills say they have 500 million kg of cotton yarn lying around,unsold. The government is yet to take a call on whether the restrictions on exports should be extended. The textile lobby is,even now,pushing against lifting the restrictions,and every indication so far is that the government will,once again,bow to their demands. This is in spite of the obvious economic failings of the idea,and that it runs in a direction opposite to India’s opening up to the world. Not just mills are affected: Gujarat — the state is a big producer of high-quality cotton — has persuasively made the case that this policy unforgivingly,unforgivably squeezes ordinary farmers.

The government must ease the restrictions on the export of cotton yarn. Indeed,it must go further,as some mill owners are demanding. It must commit that such knee-jerk,short-sighted and capricious measures will no longer be employed. After all,each time restrictions are imposed,it means small cotton mills have to break contracts with overseas clients,which gives to them — and to the industry in general — a reputation for unreliability. This is not the face that India must turn to the world; and it is not the way to operate in a globalising economy,which has only brought benefits to India’s producers and consumers.