Rising input cost sends cotton mills on tailspin

Manufacturers say the price of cotton candy rose to Rs 80,000 this year, Spinning mills owners say the spiralling price of raw material has weakened their position in the global market.

COIMBATORE: The steep rise of cotton over the last two years has landed textile manufacturers in a crisis, Manufacturers say the price of cotton candy rose from Rs 37,000 in 2020 to Rs 80,000 this year, Spinning mills owners say the spiralling price of raw material has weakened their position in the global market.

Ravi Sam, Chairman of South Indian Textile Association, said, “Cotton price rose to Rs 51,500 in April and then to Rs 68, 000 in October 2021. During the same period, yarn price stood at Rs 331 per kg. Now, the yarn price has risen to Rs 401 per kg as cotton costs Rs 80,000 per kg.”

Sam said the sudden increase in cotton prices has led to the textile industry losing ground in the global market as competitors like Bangladesh get an edge in the game.

K Selvaraju, General Secretary of the Southern India Mills Association (SIMA) said, “If this situation continues, the textile industry will not sustain its position in the domestic and international market. We do not insist on banning exports. The Indian textile industry needs roughly 330 lakh cotton bales per year. It is enough to maintain 65 lakh bales as a closing stock (unsold inventory aka cotton in this case). However, irregularities in speculative trade (buying commodities with high risk on expected returns) in stock exchange are one of the reasons for the increase in cotton price.”

Selvaraju explained, to contain the price, the speculative market should be regulated by hiking the investors’ margin cost on cotton trade to 25 per cent from 11 per cent. The Central government must also eliminate the import duty of 11 per cent on cotton to ease the price in the domestic market, he asserted.

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