Why has a restriction on Chinese cotton harmed Noida's apparel traders?

1st Sep 2021, Mumbai:

Covid isn't the only company with ties to China. The country is also linked to recent losses in the clothing business in Noida. For the past seven months, the city's garment manufacturers have been accumulating production losses as a result of an unexpected worldwide ban on Xinjiang cotton.

Following claims of human rights violations against Uighur Muslims, who are mostly employed in cotton production, the United States and a few other nations have prohibited the import of cotton from China's Xinjiang region. According to reports, the group has been forced to work in Xinjiang, which produces a large portion of the world's cotton.

Chinese manufacturers have restricted production in their country as a result of the international boycott, and have ordered enormous quantities of cotton yarn from India and other parts of Southeast Asia. Because most Indian cotton is now exported to China, yarn and thread costs have risen dramatically for home dealers. Apparel producers in the city stated yarn prices in India had climbed by 70-80%, resulting in higher production costs. The losses have increased even greater as neighbouring countries such as Bangladesh export clothing at lower prices.

“Yarn exports have climbed by roughly 75% in the last six months, while our prices have increased by almost 80%. As a result, our production costs have grown. We are currently shipping a dress for $8 (Rs 588), which Bangladeshi producers can produce for $6.5. (Rs 478). We can no longer afford this pricing. According to Lalit Thukral, president of the Noida Apparel Export Cluster, “business is going to other countries like Bangladesh and Vietnam” (NAEC). 

Because yarn is not a labor-intensive business, boosting yarn export could result in job losses, according to apparel manufacturers. An industry expert estimates that a Rs 100 crore investment in cotton production will employ roughly 300 people, but a similar investment in garment manufacture will employ 70,000 people. “We're taking a look at ‘Make in India.'” However, it is evident that this tendency will not allow for indigenous production. In India, we grow cotton, but we buy it at a greater price. Our exports are deteriorating, and fewer people are finding work,” Thukral explained. He claimed that the garment export sector has dropped from $18 billion to $12.5 billion in the last three years.

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