TIRUPPUR: Claiming that the union government has not taken any action to remove the 11% import duty on cotton, despite repeated demands amid rising yarn prices, the Tiruppur's domestic knitwear sector is considering to go on a strike, and consultations are under way with the domestic producers in this regard.
In Tiruppur – the knitwear capital – where a majority of the knitwear production relies on cotton yarn, the steadily rising yarn prices have caused a major concern among exporters and domestic manufacturers alike. From January till now, yarn prices have risen by Rs 61-Rs 65 per kg (cumulative), prompting the domestic manufacturers to consider launching a strike, industry sources said.
R Damodharan, secretary of South India Hosiery Manufacturers Association (SIHMA), said, "The continuing rise in yarn prices has created a severe crisis for exporters and domestic manufacturers. To overcome this, we met with union ministers and urged them to take steps to temporarily remove the 11% import duty on cotton. We understand that the centre is in talks regarding this, and we expect a favourable response soon."
He further said, "However, many members of our association have been putting forward suggestions, including a strike, to expose our crisis and attract attention. We are planning to convene a joint committee meeting, involving all industry bodies, on Monday or in the coming days to discuss it."
In a statement, Kumar Duraiswamy, joint secretary of Tiruppur Exporter's Association, said that cotton prices have escalated dramatically since February. "Cotton, which was traded at around Rs 54,500 per candy (355 kg) in February has now surged to nearly Rs 70,000 per candy. India's annual cotton production, which normally averages around 330 lakh bales (1 bale = 170 kg), is expected to decline to nearly 280 lakh bales this year," he added.
It may be noted that Tiruppur has an annual export value of around Rs 44,000 crore and domestic trade worth Rs 30,000 crore.
Duraiswamy noted that nearly 100 lakh bales were purchased by the Cotton Corporation of India (CCI), this year alone, and subsequently released into the market. "Over recent months, traders have reportedly procured and hoarded large quantities of cotton from CCI stocks, contributing significantly to speculative price escalation," he said, adding that widening gap between production costs and realisable prices is creating severe financial instability across the industry.
However, the exporters' faction said that they are not planning to go on a strike yet.