High yarn prices have compounded the pain of the textile industry: Is the textile industry in a dilemma!

09 December 2021, Mumbai:

Kumar Doraiswamy, a Tirupur-based exporter was one of the organisers of a strike called by the Federation of Tirupur Apparel Cluster on November 26 to protest soaring yarn prices, which have increased nearly 50 percent over the past year.

Between January and November, yarn prices increased from Rs 220 per kg to Rs 330 per kg.

Doraiswamy says he has been in a bind as a result of the rising input costs. The strike had 117 stakeholders participating, with nearly 80 percent of units involved in textile production in the area shut, causing a production loss estimated at Rs 100 crore, according to the Tirupur Exporters and Manufacturers Association. Persistently high yarn prices have compounded the pain of the textile industry, which is already reeling under high input costs.

As a solution, textile manufacturers are asking for a temporary ban on yarn and cotton exports to arrest the shortage and ensure availability for domestic players. S. Venkatesan, Member of Parliament from Madurai, has written to Union Textiles Minister Piyush Goyal, seeking his intervention to bring down cotton and yarn prices.

Textile manufacturers say that increased input costs have put them under extreme price pressures. These include the volatility in crude oil prices, which have resulted in higher freight costs, as well as the rising cost of chemicals and dyeing, and so on. Factors like these have made it difficult for firms to remain price competitive, creating difficulties both with securing new orders and servicing existing ones.

Certain sections of the industry are also up in arms against the government’s move to hike GST (Goods and Services Tax) on some textile fabrics from 5 per cent to 12 per cent. Trade associations from the Gujarat belt have voiced concerns on this move, pointing out that the industry is already reeling under stiff competition from imports from Vietnam, Sri Lanka and Bangladesh.

Textiles is a labour-intensive industry—and as a result, an important employment generator—that was vying to seize the China opportunity. While orders have grown and industry has done brisk business in the last few months after the lockdown, countries like Bangladesh have given India stiff competition. Between January and July, India’s textile exports touched Rs 1.77 lakh crore, 52.6 per cent higher than the same period last year and 13.7 per cent higher than the pre-pandemic level of 2019.

So far, the government has not yielded to the growing clamour to ban yarn exports or against its notification of levying a 12 per cent GST rate on manmade fibre yarn, fabrics and apparel from the current tax rate on MMF, MMF yarn and MMF fabrics of 18 per cent, 12 per cent and 5 per cent, respectively.

The government approved a production-linked incentive scheme worth Rs 10,683 crore for the textile industry in September this year to boost manufacturing and exports.

India Today (The news article has not been edited by DFU Publications staff)

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