Prices up by 8% in June and another hike is in the offing
The knitwear industry in Tirupur, which does business worth Rs 500 billion of which half is exports, has urged the mills not to increase cotton price further, as exporters are already struggling to survive. The falling rupee has given no respite to the industry as the price of yarn, its key raw material, has zoomed. Competing countries’ currencies also falling, taking away the low rupee advantage.
Raja M Shanmugham, President, Tirupur Exporters Association, said cotton yarn price has risen by Rs 20 a kg this month to Rs 240 per kg for 40 count yarn. Going by strengthening cotton prices, industry fears another hike of Rs 5 per kg in July.
The price hike has put the knitwear garment export sector in a difficult situation, hard to sustain in the competitive global environment.
Shanmugham said the beleaguered knitwear export sector has been passing through a challenging business environment following the implementation of GST. This was evident from the continuous decline of knitwear exports month after month since October 2017, after three months transition period was over. He added that exports declined as much as 21 per cent during the second half of 2017-18.
The most worrying factor is that the negative growth trend in exports is continuing in the current financial year and the average decline of knitwear exports in the month of April and May was 34 per cent.