Dr. Sakthivel, in his letter remarked, “The situation now has become alarming and shocking to value-added garment export sector. 25 percent cotton yarn price increase in just 5 weeks has in-fact shattered planning of garment sector.”
The cotton yarn rates had increased by Rs. 35 / kg in just one month up to March 24th, 2013. However, on April 1, 2013, Rs.15 per kg increase has been made by yarn producers by creating artificial shortage (Rs 50 per kg increase in five weeks).
The current cotton prices per candy are around Rs. 37,000/-. During Oct 2010, same cotton prices prevailed, however, at that time, the price of cotton yarn for 40s count was Rs. 204 per kg, which is Rs. 250/- per kg as on April 1, 2013, despite similar cotton prices, he added.
Chairman AEPC, in his letter observed that, “Whenever the demand in importing countries get increased, apart from increasing of cotton prices in the domestic market, the cotton yarn prices are normally hiked in the domestic market abnormally and on these occasions, there is no parity exists between cotton and cotton yarn prices, which is ultimately affecting the value added segments including garment manufacturers who are finding it difficult to cope with this crisis and finalize export orders.”
Dr. Sakthivel, further commented that, the export orders just finalized are difficult to be implemented. This may bring loss of buyers’ confidence in buying from India. Even the domestic garment manufacturers are finding difficulties in procuring cotton yarn due to sudden surge in prices. In the current year (2012 - 2013), the cotton yarn prices have already crossed 900 million kilos, which is a record export of such demand in our competing countries; mainly China.
In view of above, Chairman AEPC in his letter recommended steps to come out of the prevailing crisis:
- Cotton yarn exports, except 60s count and above, may not be permitted for exports.
- The facility of duty drawback on the exports of cotton yarn, be stopped forthwith or
- The cotton yarn should be permitted to be imported duty free, as in the case of cotton, which is imported duty free, so that the prices of basic raw material for the manufacturing of garments i.e. cotton yarn remains stabilized.
Chairman AEPC in his letter requested Textiles Minister for immediate intervention. He stated that, “It is a alarming situation, the garment exporting community is looking upon you for your immediate intervention so that prices can be brought down.”
Chairman also thanked Hon’ble Union Minister of Commerce, Industry and Textiles for removing excise duty on fabric/readymade garments, which has given vibrancy in the sector as a whole and has enhanced manufacturing of garments.
Other garment associations like TEA, CMAI, GEAR, AEMA, GEA, etc have also registered their concern on the high cost of yarn prices.
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