High raw cotton and yarn prices have pushed Gujarat’s textile industry into turmoil

Nayan Dave writes

Gujarat’s textile value chain is cutting production by almost half and units are likely to shut down as raw cotton and yarn prices continue to rise despite the Centre’s move to remove import duties.

The price of raw cotton is 1 lakh to 1.15 lakh per candy. According to Saurin Parikh, president of the Gujarat Spinners Association, for the past three weeks, yarn makers have not received new orders due to unprecedented prices. “If prices do not go down, most spinning units will be forced to shut down operations. Already many spinning mills are counting losses to meet customer promises. About 120 spinning mills in Gujarat are currently operating at a little over 50% capacity. We have no choice but to hope for the best and prepare for the worst, “he said.

Since weavers and international buyers are unwilling to pay higher prices for yarn, most spinning units are unable to raise the price of the final product in proportion to the rate of raw cotton, said Parikh, founder of Pashupati Coatspin.

Garment manufacturers in the state are also witnessing a 45% decline in production. Ahmedabad is one of the top three garment clusters in the country.

“It is very difficult to run a garment manufacturing unit as the price of fabric is skyrocketing. Most garment manufacturers have yet to recover from the effects of the epidemic. Now they are facing another big challenge, the ever-high cotton price, “said Vijay Purohit, president of the Gujarat Garment Manufacturers Association.

MSMEs employ more than 90% of the 25,000-odd garment manufacturers across Gujarat, and employ over 2 million people. There are about 15,000 garment manufacturers in Ahmedabad alone. Some have tied-up with global brands and exported garments all over the world.

According to the priest, if the price of cotton does not go down, many units will be shut down in a few months, resulting in huge loss of employment.

Chintan Tagore, president of the Welspun Group, said it would take time to ban cotton exports. “Two Welspun units in Gujarat are operating at 60% capacity Our international buyers are not willing to take advantage of the rising prices of raw materials. In some cases, we are supplying textile products despite losses to meet previous commitments. ”

Ahmedabad-based Chiripal Group cut production by 20%, says senior executive PK Sharma. “Compared to other textile players, we are managing price growth somewhat better due to our diverse business portfolio. However, the reason for worrying about the price of inflated cotton is that it is the most important raw material for most of our manufactured goods, ”said Sharma. Chiripal Group manufactures fabrics, terry towels, denim and other textile products.

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