Soaring yarn prices hit TN knitwear industries, manufacturers on two-day strike

A steady increase in the price of yarn over the last few years has severely impacted the knitwear units in Tiruppur as well as in other districts. Knitwear units in Tiruppur, Erode and Karur are on a two-day strike on May 16 and 17 to protest against the price hike. Manufacturing, exporting, dying and printing units also downed their shutters in the district. On Monday, May 16, Chief Minister MK Stalin also wrote to Prime Minister Narendra Modi and sought his intervention to solve the “serious disruptions” faced by the state’s textile industry.

Tiruppur-based knitwear manufacturer Sarathi who runs a small manufacturing unit with four suppliers told TNM that the industry was badly hit by the pandemic, but the situation is being made worse by the frequent price hikes. “Previously, the price of yarn used to increase only once a year of once in two years. But, in the last 18 months, it has been increasing every couple of months. Yarn that cost Rs 190 a year-and-a-half ago now costs Rs 470,” he says. According to Sarathi, the manufacturing unit’s buyers (usually foreign) supported manufacturers by increasing the surcharge, but the frequent hike has ensured that they do not get such support from buyers anymore.

"The availability of wheat reduced for domestic usage and the government banned its export. They could have done the same thing for the yarn too. They are repeatedly citing scarcity as the reason behind the hike but not banning the export of yarn. The state and Union governments are not ready to reduce the price. Many small units have shut down, and the ones still operational have curtailed their operations due to the pandemic. However, our condition today is cannot be blamed on COVID alone,” he said.

Venkateshan, who runs a small printing unit in Tiruppur, said that the printing industry has seen a price hike of up to Rs 180 in the last four months. “The effect of the hike is greater for manufacturers than the printers like us. But to show solidarity, we are also participating in this strike,” he said.

The effect of increased yarn prices is also felt by printing units, as it reduces the volume of orders they get. “Manufacturers are already facing losses due to the price hike. If they opt for printing, they demand the lowest quotation per t-shirt,” he adds.

According to the Tiruppur Exporters' Association, Tirupur contributes about 45% of the country's total knitwear exports. In 2019-20, Tirupur had exported knitwear worth Rs.27,280 crore, which dipped to Rs 24,750 crore in 2020-21.

CM Stalin, in his letter to the Prime Minister, said that a large number of spinning, weaving, and garment units “face the danger of closure due to unsustainable demands on their working capital and price mismatch between the agreed price of supply to the buyer vis-a-vis the cost of production. As a result, the manufacturers of garments are suffering huge losses and many MSME units have already closed their operations. This has resulted in massive job losses in a sector that is traditionally an employment generator.”