Tamil Nadu textile companies concern over surge in cotton prices

Tamil Nadu based yarn and garment manufacturers who are grappling with inflated raw material costs as they struggle to hold their positions in the international export market has started to worry over the rising cotton rates that began last year.

An increase in raw material prices impacts manufacturing competitiveness, making Tamil Nadu’s exporters vulnerable in the global market now populated by cheaper goods from Bangladesh, Vietnam and Cambodia.

Last year, the state’s textile entrepreneurs to circumvent price uncertainty usual during the turn of the year had resorted to importing cotton from African nations..

The current cotton season’s prices have risen in concert with climbing higher international prices since October last year, with the rates touching $85 cents a pound recently. Cotton prices in the country have increased sharply – nearly 14% towards levels around Rs 43,000 a candy. Holding at a higher level, they have led to need for higher stock for production among garment makers even as observers attempt to prevent panic buying as seen last year.

K Selvaraju, secretary-general at Southern India Mills’ Association, a Coimbatore-based association of cotton mills said that the increase at this time of the year is usual, the aid of higher international prices is providing an additional boost. Farmers are also holding back stocks as a growing majority of them have begun tracking international market rates to adjust prices. Thirdly, Pakistan has begun import of Indian cotton to touch about 7-8 lakh bales this year while last year it was under 2 lakh bales.

Tirupur’s entrepreneurs have for long tried to cut down price of cotton access, including a tie-up with vessel charterers to ship in cotton from Gujarat instead of road transport.

K Phanindra Reddy, Tamil Nadu’s textiles secretary, said there could be some announcements in the budget regarding a textile policy in preparation for months now as Tamil Nadu has not had a textile policy for years even as Gujarat and Andhra Pradesh continue to provide subsidies, besides central government schemes for technology upgradation.