Restricting yarn exports is increasing fabric prices and reducing garment competitiveness. Assuming that fabric-making and processing constraints are because of non-availability of yarn, the Government has limited yarn exports to just 720 million kg. This has forced all yarn importers in Bangladesh, Turkey and Egypt to source woven and knitted fabrics from India.

While this has enabled export of value-added products, on the other hand, it is aggravating the constraints in fabric-making capacity, leaving less fabric for domestic consumption. The inclusive growth that is taking place in the domestic market is growing faster than ever before, further reducing the fabric available to garment exporters. Given this reality it would be wise to allow another 200 million kg of yarn to be exported before March 31, to cool the demand for scarce fabric.

Weaving charges are expected to shoot up consequent to the demand for fabric exports. There is plenty of unconsumed yarn with most mills as exports are blocked and domestic fabric-making capacity is insufficient to consume all the yarn produced in the country. The TUF announcement should come as a relief to those waiting to implement their investment plans, as there will be more capacity addition in fabric-making and, a year from now, we may see relief in this constraint as well.

However, wet processing will still lag behind due to environmental issues. Understanding the real bottlenecks and suitable policy intervention alone can help the garment-makers who are suffering from want of fabrics.

Their traditional sources of imports from China and Indonesia have become far more expensive than Indian fabrics and the domestic demand and export demand is pushing up domestic prices of fabrics. Even as we are increasingly faced with unsold yarn, weaving capacities in mills in Bangladesh, Turkey, China and Egypt are lying idle without yarn.

Manikam Ramaswami

Loyal Textile Mills

Chennai

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