After battling high cotton prices for more than a year, apparel makers are planning to increase the prices of their products. After this hike, labels like Indian Terrain and Raymond UCO Denim will become more expensive. Innerwear brand Enamor has already increased the prices.
Shekhar Tiwari, CEO of Enamor, which was acquired by private equity firm Advent International in 2019, said, “We have seen double-digit price hikes in the last one year, given the unprecedented rise in cotton and yarn prices.” Advent also has controlling stakes in men’s innerwear brand Dixie Textiles.
Due to sluggish demand due to the COVID-19 pandemic, apparel manufacturers have so far been in no mood to pass on the higher cost to the consumers. But with the improvement in consumer demand due to festive sales, the prices in clothing are set to go up.
Vidyut Rajagopal, Managing Director, Indian Terrain, said, “So far we have been able to control the prices by judiciously buying cotton and yarn and our stock has been produced for the next three-four months.”
“But if the prices do not come down in the next six months and it becomes unbearable for us, then we can consider increasing the prices,” he added.
Denim maker Raymond UCO Denim, which supplies denim to international and national brands, is now pushing for a price hike.
Arvind Mathur, CEO, Raymond UCO Denim said, “The brands did not want to hike the prices due to the recent fall in consumer demand, but now we are asking international as well as domestic brands to increase the prices and they will continue to increase the prices in the coming months. In months its impact can reach the end consumer.”
Denim has a large component of cotton, which can be up to 50 percent in terms of value. Other clothing productions such as T-shirts also contain 40-50 percent cotton and innerwear 10-20 percent.
Supply chain disruptions, Western sanctions on China’s textile hub, Xinjiang, and power shortages in China have kept cotton prices rising for more than a year.
“Tight global supply, coupled with high demand and consumption in the international market, has driven the price hike,” said Bhagyashree Bhati, assistant director, industry research, CARE Ratings.
The price of cotton in India has increased in line with the global prices. Indian cotton prices have averaged around 24 per cent higher for the 12-month period ending September 2021, compared to the 12-month period ending September 2020.
Nidhi Marwah, vice-president and sector head, Corporate Sector Ratings at ICRA, said, “In the last three months, prices have been higher by about 50-60 per cent year-on-year.”
The average price of the S-6 variety of cotton in India during the period October 2020-August 2021 was Rs 135 per kg. High export of cotton from India led to increase in cotton prices domestically.
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