NAYAN DAVE & SAJAN C KUMAR
With cotton costs breaching the Rs 100,000 per sweet mark, all the textile worth chain is within the throes of a grim monetary disaster, compounded by dismal export demand and manufacturing cuts at each degree. Not solely smaller models, even greater gamers are feeling the warmth of accelerating price of necessary uncooked supplies. Even the federal government’s determination to abolish import responsibility on cotton has not supplied the much-needed reprieve to the ailing textile business, the second greatest employment generator after the agriculture sector.
“Textile companies are bleeding due to the steep rise in cotton prices. There is production cut all across. They are finding it difficult to match retail rates in proportion to high cotton prices. We want the government to intervene to curb the relentless bullish trend in cotton,” says Chintan Thaker, president, Welspun Group. Thaker mentioned that greater firms like Welspun haven’t any alternative however to proceed manufacturing actions to be able to fulfill long-term orders of their worldwide shoppers. Welspun’s textile models in Gujarat are working at 60% capability. “If the current situation prevails for a longer period of time, there would be further production cuts,” Thaker warned.
“Nearly 25-odd denim makers in Gujarat have curtailed production, ranging from 25% to 50%,” says Ashish Shah, MD of Ahmedabad-based Aarvee Denims and Exports. Most of the denim producers are struggling losses as it isn’t attainable to steadiness cotton and different uncooked materials costs with completed merchandise, says Shah. Aarvee Denims too is witnessing a 50% manufacturing lower.
Spinning models are the largest victims of inflated cotton costs, claims Gautam Dhamsania, secretary, Spinners Association of Gujarat (SAG). “Procurement of cotton from spinning mills has gone down by 50% over the past one month. Exports demand for cotton yarn is weak,” he reveals.Dhamsania says that of the 120 spinning mills in Gujarat, five-six have closed operations and one other half a dozen have shifted to polyester and viscose yarn making. The relaxation have decreased manufacturing and dealing hours, he lamented. Saurin Parikh, president of SAG, attributes the present unrealistically excessive costs of cotton to future buying and selling on commodity exchanges, coupled with inventory piling in massive portions by a handful of multinational firms. He proposes that the federal government ought to put a inventory restrict on cotton to curtail rising costs.
“A large quantity of grey fabric comes from Tamil Nadu to Gujarat for processing. With weavers in Tamil Nadu having reduced production by 50% due to increased prices of cotton yarn, processors in Gujarat are not getting fresh processing job orders from the southern state,” says Naresh Sharma, president Ahmedabad Textile Processors’ Association.
Apart from knitted cotton yarns, there was much less demand for polyester and viscose-knitted yarns additionally from Tamil Nadu because the previous fortnight, says Dev Kishan Mangani, former president of Surat Textile Traders Association (STTA). The Tirupur cluster is especially sourcing knitting yarns from Surat and Ludhiana.
The worth rise in cotton and cotton yarn has hit the Tirupur garment-export cluster badly. Knitwear exporters really feel they might discover the going troublesome, if the issue isn’t addressed instantly. They are ready for the result of the proposed assembly of Union commerce minister Piyush Goyal with textile stakeholders scheduled for subsequent Tuesday. Asia’s largest knitwear cluster is observing a two-day strike from Monday in protest towards excessive yarn costs over a interval of 1 yr.
“This would be a peaceful strike. There won’t be any dharna or protest march. All the units in the cluster will remain closed for two days. Our aim is to draw the attention of the authorities and seek a solution from the prevailing situation,” mentioned Raja M Shanmugham, president, Tirupur Exporters’ Association (TEA).
The TEA has additionally sought help from all main banks to tide over the monetary disaster confronted by the knitwear exporters, largely small models, that are reeling underneath the burden of unprecedentedly excessive yarn costs. It has requested banks to handhold the exporters and supply ample monetary help. The TEA has additionally sought contemporary infusion of liquidity schemes like ECLGS. It desires MSMEs to be permitted to avail extra credit score services of 10-20% of the present restrict.
Market observers really feel the severity of the impression on the value-added knitwear garment sector can have a cascading impact on every stage of producing, threatening the livelihood of hundreds of employees employed with these models, mentioned the TEA. Apart from elevated costs of yarns, knitwear-exporting models are additionally going through a hike in freight prices because of the Russia-Ukraine conflict.
The knitwear exporters could not be capable of fulfill greater than 40% of their export orders in prevailing conditions, Shanmugham apprehends. “Tirupur-based exporters are in the process of preparing the first summer order for the export market and the second summer order is due in May-end. We are doubtful that we will be able to deliver these orders and hence the TEA has approached yarn suppliers to revoke price hike,” he states grimly.
Source: www.financialexpress.com”