Tiruppur’s over 8,000 garment manufacturing units shut down recently to protest against rising yarn prices. Low supplies have pushed up yarn prices by almost 50 per cent to Rs 300-320 per kg in the last four months. Members of the Tirupur Exporters Association and the South India Hosieries Manufacturers Association are worried this may lead to finished goods’ exporters losing their competitiveness in foreign markets.

Rising yarn prices are also impacting the capital inflow of MSMEs, delaying revival plans, says Vinod Kumar Gupta, Managing Director of Dollar Industries, who has factories in garment clusters of Tiruppur, Ludhiana and West Bengal. Kolkata-based Federation of Hosiery Manufacturers Association has urged finance minister Nirmala Sitharaman, the Union textiles and state textile ministers in Tamil Nadu and West Bengal to ban yarn exports till prices stabilize.

Focus on exports, global shortage fuel yarn prices

Yarn manufacturers including K B, Agarwala, Managing Director, Rupa & Company and President, Federation of Hosiery Manufacturers Association (FOHMA) also attribute the rise in prices to mill owners’ excessive focus on export markets, causing domestic supply squeeze.

Vinod Kumar Gupta, Managing Director, Dollar Industries agrees, spinning mills are taking advantage of the demand-supply gap and increasing prices by 60 per cent whereas raw material prices have increased only by about 30 per cent. However, Sudarshan Jain, President, Knitwear and Apparel Manufacturers Association of Ludhiana, blames global shortage of basic raw materials such as fibers and chemicals, for the supply squeeze. While Sandeep Jain, Executive Director, Oswal Woollen Mills points out, yarn shortage and upsurge in prices is due to production cut in April-July of 2020.

Seeking government intervention

The hike in yarn prices is being passed on to consumers as brands like Dollar have hiked garment prices by around 10 per cent in the past few months. The brand plans to hike prices by another 5-7 percent from April 1, 2021. Innerwear brand Rupa too has hiked prices by 10 percent. Both companies fear further increase in prices may impact demand for their garments amongst consumers.

The one-day strike in Tirrupur was the first step taken by garment associations to attract government’s attention to this issue. They plan to hold several meetings over the week to urge spinning mills to streamline supply and ease prices of yarn domestically.