Blended yarns exported largely to Europe, Middle East and the Latin American countires and exporters now face stiff competition from Thailand and Indonesia. These countries have already established substantial capacities for the production of both polyester and viscose staple fibres and in view of sharp depreciation of their currencies they are able to quote very low prices. The effect of this on our exports can be seen from the fact that the Indian spinners have been forced to slash their export prices for say, 30s (65/35) polyester-viscose (PV) blended yarn to about US S 1.80 per kg (C&F) compared with the US$ 2.50 per kg (C&F) prior to the South East Asian currency crisis. the spinning industry are now resorting to distress sales abroad.

While production of blended yarn in thecountry has fallen, stocks with the spinners have piled up due to the poor demand. As these statistics show production of blended yarn in the country had fallen to the extent of 3.45 per cent by October 1997 compared with the level reached in July 1997.

Stocks with spinning mills had risen during the period by 21.84 per cent throwing the industry into quandary.

This indicates a sharp decline of about 28 per cent in export price realisations for this item. Export prices are so unremunerative that most spinners are believed to be making cash losses in export business. Yet they continue to export because local demand is subdued.

To add to woes of yarn manufacturers, while prices for their yarn are falling, polyester fibre, a raw material for yarn, has started appreciating. This may make the working of quite a few blended yarn manufacturing units further unviable.

Of the two main varieties of blended yarn, viz. Polyester-Viscose (PV) and Polyester-Cotton (PC) exports of PV are declining while that ofthe second category have gone up. This can be due to the fact that competing exporters might not be able to offer much polyester-cotton blended yarn since neither Indonesia nor Thailand produces natural fibre. The trend of blended yarn exports from India can be seen form the following table:

The industry is of the view that incidence of excise duty on blended yarn is high at around 27 per cent while that on cotton yarn it is about five per cent. Such wide differences cannot be justified and the levy on blended yarn should be lowered to about 6.5 per cent to provide the much needed relief to the industry. This can also help blended fabrics and garment sectors. The industry is also pleading for depreciation of the rupee. It remains to be seen to what extent the government accedes to these suggestions.