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Gayathri G

Chennai, July 21

Despite the recent fiscal measures announced by the Centre, high cotton and yarn prices continue to hurt the textile apparel industry, say industry players.

Mr A. Sakthivel, President, Tirupur Exporters’ Association, said the rising prices of cotton yarn were crippling the value-added apparel exports. “When the yarn prices were hiked by about 25 per cent in the past two months, the increase of yarn rates by Rs 5 a kg by mills is totally unjustifiable,” he said, adding that considering the recessionary trends prevailing in the industry, the apparel industry could not pass on the escalated input prices to the buyers.

The hosiery industry fears that if the textile mills are not considering the appeal for reduction in yarn rates, then the garment exports could lose out and buyers could turn their attention to the main competing countries such as China, Bangladesh, Pakistan, Vietnam and Cambodia.

The hosiery capital of Tirupur has already lost the race to some extent. With the dollar depreciating, buyers are slowly shifting their focus to the competing countries as currencies of these nations have not appreciated much. Besides, they quote 20 per cent lower prices.

Mr J. Thulasidharan, Deputy Chairman, Southern India Mills Association, said though steps taken by the Government were in the right direction, they led to the easing of domestic cotton price only marginally i.e., to the extent of Rs 500-750 a candy (1 candy = 355.62 kg). Still, Indian cotton is costlier than the imported ones.

Domestic cotton prices have, during the current cotton season, increased from Rs 19,000 to Rs 30,000 a candy, thanks to speculation in the futures market.

Pointing out to the price of S-6 cotton variety, Mr Thulasidharan said the increase in the variety’s price was over 58 per cent due to the huge exports of cotton.

At its meeting held on January 11, 2008, the Cotton Advisory Board (CAB) estimated exports at 65 lakh bales (of 170 kg) and fixed 310 lakh bales as the total production.

Mr Thulsidharan said over 100 lakh bales have been exported as against 65 lakh bales of CAB estimate depleting the cotton stock-to-use ratio to less than 18 per cent against 42 per cent maintained by competing countries.

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