Rising Yarn Prices Hitting Garment Exports

President, Garment Exporters Association, Mr. Rakesh Vaid has expressed concern over the steep hike in prices of cotton yarn and fabrics, adversely affecting the competitive strength and performance of Indian Apparel industry. Besides price fluctuations, fabric availability has become a serious issue as weaving units are not making any delivery commitments.
Demanding some sort of control on the export of cotton and yarn, Mr. Vaid also stressed the need to focus more on value-added exports on garments rather than raw cotton or fabric as the value addition is over six times if the same amount of cotton yarn that is being exported is used by garment exporting units for their export products.
Mr. Vaid pointed out that garment exporters are still facing financial difficulties because of worst ever world-wide recession and unit value realisation from the overseas markets and it would take some more time for the world economy and the apparel trend to revive. He further said that the labour-intensive garment export sector requires special consideration as it adds maximum value to the exported products using over 95 per cent indigenous materials.
Meanwhile, The Apparel Export Promotion Council hailed the decision of the government to withdraw sops for export of cotton and yarn, which will have a sobering impact on moving fabric prices. “ We appreciate the efforts made by Union Textile Minister, Mr. Dayanidhi Maran,” AEPC chairman, Mr. Premal Udani said. The government’s move to suspend duty concession of 7.5 per cent for cotton yarn exports under the duty entitlement passbook (DEPB) scheme will bring down fabric prices to realistic levels , Mr. Udani Said.
The prices of cotton yarn and consequently fabrics jumped nearly 50 per cent in the past five months. The price of cotton voile fabric - the most commonly used for exports of garments - has moved up to Rs. 33 per mtr. from Rs. 22 per mtr. in November last year. Nearly one-third of garment production cost is on account of fabrics.
With Asian Yarn prices hardening, countries like China and Pakistan have already taken corrective steps to cap exports of yarn. Mr. Udani also welcomed the centre’s decision to ban cotton exports in case stocks do not exceed 50 lakh bales in the coming cotton season. The step will also benefit the domestic spinning industry, he said. The government has also decided to impose prohibitive tax on exports of raw cotton and cotton yarn. Mr, Udani also pointed out that the apparel export industry suffered over 13 per cent D- growth during April to February 2009-10 due to weak demand from Western markets and rising input cost of the Indian Exporters.