Global economic crisis created a haze affecting thecommercial benefits of the businesses. While the mist is still clearing showingpositive signs of hope, increasing cotton yarn prices is creating new hassles.
After the clouds of recession started clearing, the wheelsof textile industry started spinning a successful story. With more than 50% ofthe production being exported, companies started posting profits. Currently, asituation has come where the textile industry needs to face the music. Pricesof cotton and yarn are skyrocketing, thereby affecting the overall profits.Yarn prices increased during March. Increase in the price of cotton is thereason behind this.
There is an increasing trend in the prices of yarn for thepast one year. Due to increase in prices of cotton, yarn prices havesimultaneously increased by 15%. The industry is jacking up the cotton yarnprice recurrently. 30s count yarn, which was Rs130/kg until some time back hasrose up to Rs 160/kg. Similarly 40s country yarn has increased to Rs 175/kgfrom Rs 155/kg.
Increase in the price of cotton yarn is disproportionate tothe rise in cotton prices. Some people think that along with the increase inthe cotton prices, corporate profits have also increased. On the contrary,cotton prices increased by 40% during the previous year, while yarn pricesincreased only 17% thereby affecting the profit margins to a considerableextent. Apart from this, price of cotton yarn includes 30% of the processingfee. While the cotton yarn prices have been increasing, the processing fee didnot increase which affect the profit rate.
The &sec=article&uinfo=<%=server.URLEncode(2495)%>"target="_blank">News Desk
Demanding some sort of control on the export of cotton andyarn, he also stressed the need to focus more on value added exports ofgarments rather than raw cotton or fabric as the value addition is over sixtimes if the same amount of cotton yarn that is being exported is used byGarments exporting units for their export products.
Mr. Vaid pointed out that garment exporters are still facingfinancial difficulties because of worst ever worldwide recession and low unitvalue realization from the overseas market and it would take some more time forthe world economy and the apparel trade to revive. He further pointed out thatthe labor-intensive garment export sector requires special consideration as itadds maximum value to the exported products using over 95 per cent indigenousmaterials.
Price issues have to be overcome and textile industry needsto focus on aggressive investments to meet the challenges. Garment industryadds more value to export products of India, as it consumer almost 95% ofindigenous materials. The industry also tends to be more labor intensive,thereby requiring special consideration as any downslide in the industry mightaffect thousands of apparel workers. A contract reservation for cotton and yarnexports should also be established so as to minimize the effect of increasingfabric prices in the country.
References:
Comments