Cotton prices high, garment-makers diversify in Punjab

Tribune News Service

Vijay C Roy

Chandigarh, May 22

Spiralling cotton and cotton yarn prices seem to be taking a toll on the garments industry in India and Punjab is no exception. While exporters fear losing clients, manufacturers catering to the domestic market have diversified into polyester-blended garments to offset high cotton prices.

Difficult to sustain

It’s difficult to sustain in the price-sensitive domestic market. So, almost all manufacturers in Ludhiana, including MSMEs, have either diversified or planning to diversify into blended or fully polyester fabric market. Sanjeev Dhir, partner in Puneet Knitwear, Ludhiana

A fall in cotton production in the last season coupled with a significant rise in demand by textile units, which had secured export orders, led to the shortage of cotton in the country.

In the last one year, cotton yarn prices have risen from

Rs 175 per kg to Rs 400 per kg. At Rs 150 a kg, polyester yarn costs nearly one-third of the cotton. So, it makes sense for the garment-makers to diversify.

As per the industry, due to diversification, there has been a spurt in the demand for polyester-knitted yarns. The domestic market for garments is pegged at Rs 3.25 lakh crore and it is almost three times the export market.

In Punjab, Ludhiana is the major garment hub. There are around 10,000 units in Ludhiana involved in the entire textile value chain.

Not only smaller units, even bigger players are feeling the heat of the increasing cost of yarn. Even the government’s decision to abolish import duty on cotton hasn’t provided the much-needed reprieve to the ailing textile industry.

Harish Dua, MD of Ludhiana-based KG Exports, said, “Those who were catering to the domestic market diversified into polyester garment. Exporters, however, doesn’t have much choice. They fear losing clients as unreasonable price increase makes manufacturers uncompetitive in the international market and we end up losing clients.”

Exporters demand that the government should immediately ban the export of cotton yarn, else there would have a cascading effect on each stage of manufacturing.

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