The Karur Textile Manufacturers Exporters’ Association has expressed disappointment over absence of any announcement in the Union Budget with respect to checking the continued rise in the prices of cotton yarn.
“We were expecting an announcement in the Budget as we had made repeated representations to the government seeking steps to control the prices of yarn. Despite our pleas, yarn prices have gone up by about 35% since September/October last year. The prices were hiked twice in January this year and now again on February 1, pushing us into a crisis situation,” P. Gopalakrishnan, president of the association, told The Hindu.
The spinning mills attributed the price rise to increase in cotton price in the global market, but the hike in price of yarn was not proportionate to it, he said.
He alleged that some MNCs were stocking up cotton and creating an artificial demand to increase prices.
Home textile products exporters in Karur had to quote the prices to prospective buyers even before preparing the samples and once the contract was signed there was no scope for revising the prices. Besides, some buyers preferred one-year contracts, he said.
The rise in yarn prices, he said, had come at a time when many buyers from the United States and Europe, who were hitherto sourcing Chinese products only, were looking at India for their requirements. “There has been a good demand in the market and more growth opportunities are opening up but the yarn price hike has been the dampener,” he said.
In a representation to Prime Minister Narendra Modi, Mr.Gopalakrishnan said the “abnormal increase” in the price of yarn, the basic raw material, has created an alarming situation in Karur home textile industry. The town was a home textile manufacturing hub and companies generated about ₹8,000 crore worth of business in home textiles including exports worth about ₹4,000 crore,” he said.
The industry was working towards achieving a business target of ₹25,000 crore by 2030 as many overseas clients were shifting towards India for sourcing their requirements. But the biggest obstacle towards achieving this was the steep increase in the price of yarns over the past few months.
The association urged the Prime Minister to initiate steps to ensure that yarn prices were maintained at reasonable levels and stable for specific periods, at least cycles of three months. Export of cotton, especially to competitors such as China, Bangladesh, Vietnam and Indonesia, should be discontinued forthwith.
The import duty on cotton should be removed so that the price of cotton and yarn came down in the market, it suggested and called for his immediate intervention to pull out the industry from the crisis situation.
