Andhra Pradesh government is contemplating slashing power tariff for spinning mills and providing them some relief. The proposal is to offer power at Rs 2 per unit to the spinning mills.

Spinning mills in the state provide employment to four lakh people but several mills are on the verge of closure due to heavy losses. Since lakh of cotton farmers and workers depend on the survival of the textile industry, the power tariff may be lowered. However, the new tariff, if implemented, would cause a burden of Rs 400 crores on the exchequer.

Similarly, ferro alloy industries owe power distribution companies Rs 300 crores. These industries may be allowed to clear their debts in two years. The price of cotton has increased from Rs 35,000 to Rs 48,000 a candy and is racing towards Rs 50,000 mark. But the yarn rate is not increasing commensurate with the increased cotton price. With a deep parity in yarn production and marketing cost, the industry is losing heavily from Rs 25 to Rs 30 per kg.

Spinning mills say the main reason for this unusual increase in cotton prices is because multinational and local trading companies are allowed to participate in auctions.