In a joint communiqué of Apparel Export Promotion Council (AEPC), The Clothing Manufacturers Association of India (CMAI) and Tirupur Exporters Association (TEA), the apparel associations noted with concern, the statement made by CITI and other Spinners Associations, that the reason for declining cotton yarn prices and slump in demand for the same was restrictions imposed by the government on cotton yarn exports.
The apparel associations have termed the statement unfounded and baseless. The entire apparel and value add industry appreciates the Textile Ministry's and the UPA governments strong resolve to protect domestic consumers and domestic jobs by ensuring availability of raw materials, such as cotton and cotton yarn in sufficient quantity for home consumption.
The associations averred that the main reason for declining prices and demand for yarns was the unprecedented hike by 100/150% in yarn prices and corresponding increase in fabric prices in a one year period. The prices went up astronomically, not due to a major increase in demand, but due to speculation and hoarding in both cotton, cotton yarns. The apparel industry very badly suffered, as they were unable to pass on the steep price increases to the final customers, due to price resistance.
Going by the replacement cost pricing policy adopted by the spinners last year, the current yarn prices are reflective of the steep fall in cotton prices. Unfortunately, most mills have bought cotton at much higher prices and hence the crisis.
The apparel industry is more than willing to work with the spinners associations to ensure all rounded growth in domestic demand and supply. An increase in domestic demand and supply not only benefits the Indian consumers, but creates millions of badly needed jobs.
The current scenario is also bleak for the apparel exporters, as the end buyers have been scared away with the high pricing of raw materials in the early part of the year. Now that the prices have stabilized, it is hoped that customers will come back. So far the buyers are still playing the wait and watch game, said a spokesperson on behalf of the associations.
The apparel industry is not in favour of artificially controlling supply of yarn by curtailing production. In case this were to happen, the industry would demand that the government make import of cotton yarn duty free, so as to provide a level playing field.
Apparel Export Promotion Council (AEPC)
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