Economy

Galloping cotton prices cause for worry

Swetha Kannan Bangalore | Updated on March 12, 2018 Published on February 21, 2011

cotton

Galloping cotton prices have forced apparel retailers to hike retail prices by 10 per cent and exporters too are fighting hard to remain competitive. But they are not really banking on the Budget to address these issues.

“Cotton prices have nearly doubled in the last six months - from Rs 35,000 a candy in September to Rs 63,000 now. Till now, we were shielding our customers from the escalating raw material prices. But for the ongoing spring summer season, we have hiked prices by 8-10 prices across brands,” says Mr J. Suresh, Managing Director, Arvind Brands and Retail, which retails Flying Machine, US Polo and Arrow.

Indus League, which retails brands such as Scullers, Jealous and John Miller, too has increased prices, “although we are trying to hold on to entry level price points on value brands,” says Ms Rachna Aggarwal, CEO, Indus League.

If the cotton prices continue to escalate, retailers say they would be forced to look at another round of price hike (10-15 per cent) around September.

The going has been challenging for garment exporters too. Says Mr Rajendra Hinduja, Managing Director, Gokaldas Exports: “Trading in futures has led to lot of speculations around prices and everybody wants to encash on it, leading to poor supply in the market. And our global customers are not willing to pay more to account for the rise in commodity prices. It is difficult to snatch orders now.”

Even as the battle on ground gets tougher by the day, apparel manufacturers and retailers are not expecting any succour from the Budget to be tabled on Monday. “The Finance Minister recently announced that no income tax benefits will be given to exporters and we have to fight our own battle,” says Mr Hinduja.

While cotton prices may not figure among the government's priorities, retailers expect announcements around FDI. Mr Suresh says it is high time trade was opened up to FDI. He also hopes service tax on rentals would be removed.

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Published on February 21, 2011
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