The spinning industry in India still faces problems despite power tariff reduction at Rs 3 per unit that is insufficient to bring back its competitiveness, but its quality yarn is bringing back global buyers being disappointed by inconsistent and low quality Indian yarn.

Last 18 months have been a nightmare for the energy intensive Indian spinning and weaving sectors due to high power tariff and general energy shortages despite the Indian government’s efforts to boost its yarn and fabric exports by providing subsidies on the export of these two items. The government later announced further subsidy on a few focused market that included Pakistan. Chinese shifted their orders from Pakistan to the Indian spinners. Some large fabric manufacturers also preferred cheaper Indian yarn over the expensive domestic product.

Yarn exports from Pakistan are slowly picking up as some Chinese importers have agreed to buy at higher rates. Still around 110 spinning units are closed creating supply concerns. The spinners are determined that they will not export their goods at loss. The current prices offered by the Chinese buyers though a little higher are not attractive enough to warrant reopening of the closed units. Industrial slow down in China a month before the Chinese New Year which is cited as the reason for low prices offered by few Chinese importer, which was not attractive enough. Pakistani weavers in the meantime have stopped importing Indian yarn and are buying it locally at a higher price.

Pakistan’s spinning industry has for the last one decade been operating at much higher power tariff than regional economies and still remained competitive. The reason for high tariff was dependence on high cost furnace oil for power generation. The other regional economies generated minimal power from furnace oil.