Tamil Nadu textile mills facing multiple challenges to sustain business

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September 03, 2024 Tamil Nadu’s textile factories have been struggling for nearly two years due to a decline in demand, high electricity costs, and comparatively higher raw material prices. In order to avoid losing market share to competitors from other States, the industry is looking for actions from the Central and State Governments to address its problems.

With 24 million spindles, the State’s 2,100 textile mills have suffered a decline in production over the past two years to the point that over 500 of them have ceased operations and 1,000 more are operating at reduced capacity.

According to Ravi Sam, a former head of the Southern India Mills’ Association (SIMA), yarn from textile mills in states like Madhya Pradesh, Gujarat, Maharashtra, and Odisha costs between Rs. 20 and Rs. 25 per kg less than yarn from Tamil Nadu.

The Tiruppur Exporters’ Association honorary chairman, A. Sakthivel, stated that Tiruppur’s knitwear plants had begun purchasing yarn from mills in other States because these units offered competitive prices.

The chairman of the SIMA, S.K. Sundararaman, stated that yarn was produced in Tamil Nadu textile mills for a variety of uses and quality levels. “Garment units in Tiruppur receive hosiery yarn, which is genuinely a commodity,” he declared. Less than 100 mills were thought to supply hosiery yarn to Tiruppur’s knitwear plants. They were losing that market, though.

Tamil Nadu’s mills were going through a transformation. He stated they had to migrate to higher count yarn production, invest in an integrated plant and start adding value, or get nominated by clothing purchasers.


Another aspect that has had a significant impact on Tamil Nadu’s textile industries is the package that states like Gujarat, Madhya Pradesh, and Odisha are offering. The mills here import cotton from other States since Tamil Nadu cannot produce enough of it.

Carrying clean cotton to Tamil Nadu from other States costs between Rs. 8 and Rs. 10 per kilogramme. The competitiveness of the mills here has been impacted by the subsidies provided by other States for power, capital investment, interest payment, and talent development.

Industry insiders suggest that Tamil Nadu should concentrate on increasing its production of extra long staple cotton and providing some form of electricity to the mills located here. They contend that in order for textile mills in the MSME sector to remain competitive, the Centre should lower the import duties on cotton and loosen the Quality Control Orders

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