The crisis in the spinning industry is not confined to Pakistan, it has impacted Indian spinners as well where the problem is not the shortage of cotton. The cost of yarn production has gone up in both countries, but its demand has dipped.
The issue of subsidy is not confined to Pakistan. The spinners in India also complain of structuring funds. In Andhra Pradesh the millers accuse the government of withholding 1200 crore power subsidy. Another issue impacting the spinner was an increase in minimum support price of cotton by 25 percent that has appreciably increased the cost of spinners basic raw material. In Pakistan cotton rates increased because of poor crop. Pakistan harvested lowest ever cotton crop in 38 years due to acute shortage of water during its sowing season and then water logging in cotton fields at the time of harvest
The main reason for lower uptake of yarn from India and Pakistan is that China was the main buyer of yarn from these countries. The Chinese were constrained to stop yarn from sub-continent suppliers as its exports to the US have been impacted.
In Pakistan most of the spinners are operating at half their capacities, few have closed, and many are on the verge of closure. It is hurting local value-added sectors as well. In Indian State of Andhra Pradesh over 120 spinners have announced to halt production. Over 3.5 million spindles are installed in these mills. Even temporary closures would throw thousands out of job.
There are over 120 spinning mills in the state, and many are cutting down their production of yarn. Indian yarn is known around the world for its fine quality and is preferred by European and American retailers. The US-China trade war has come in the way of export of Indian yarn and with the USA placing curbs on production in China, domestic spinning mills have started to feel the pinch.
