Continuous rise in cotton price poses hurdle for exports

Continuous rise in cotton price poses hurdle for exports

If India’s exports of textiles and garments recover quickly this fiscal from the lows of the pandemic-hit FY22, lucrative orders may elude them in FY23 due to rise in the cotton prices. 

India

If India’s exports of textiles and garments recover quickly this fiscal from the lows of the pandemic-hit FY22, lucrative orders may elude them in FY23 due to rise in the cotton prices. 

It is a key raw material, and its shortage in the domestic market is one of the reasons. While shipments continue to be strong due to orders won earlier, the spectre of a slump in exports is staring at textile and garment firms as new orders are hard to come by. This is at a time when the global markets are vibrant and poised to remain so in the near term, thanks to industrial resurgence in key markets like the US and European Union.

There are also unconfirmed reports of farmers resorting to hoarding stocks, in anticipation of a further rise in prices. In fact, an up to 80% spurt in cotton prices in the past one year has pressured margins of textile and garment firms. Most firms are struggling to pass on the rise in raw material costs to consumers. 

This has forced the manufacturers across the textile value chain – from spinning mils and weaving units to garment makers –to seek the abolition of an import duty on cotton.

RS Jalan, managing director at GHCL Ltd, told FE that while high cotton prices will help farmers and somewhat boost rural disposable income, from the textile industry’s perspective, they have created a challenge for the entire value chain.

Raja M Shanmugham, managing director of Warshaw International and president of the Tirupur Exporters’ Association, said the relentless rise in cotton prices over the past 15 months has made it difficult for companies to honour orders. Cotton ginners are also bearing the brunt of rise in prices of the fibre. 

Source: Financial Express

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