Textile industry to go on nationwide strike on Friday

Faced with pressure on margins due to exponential growth in cotton yarn prices, the Rs 55,000-crore textile industry — powerloom, handloom, made-ups and apparel makers — would observe a day’s nationwide bandh, the first of its kind, on Friday.

The aim is to draw attention of the ministries concerned – agriculture, commerce and textiles – to the sector’s various problems. There are, say the strike planners, around 12 million workers dependent, directly or indirectly, on the textile industry.

“We want the government to restrict export of raw materials, including cotton and cotton yarn. China imports nearly 60 per cent of our cotton and Bangladesh takes about 45 per cent of our yarn, and the two countries then compete with us in western markets,” said Premal Udani, chairman of the Apparel Export Promotion Council (AEPC), a trade body sponsored by the textile ministry.

Though the government has restricted cotton exports in the current year at 5.5 million bales (a bale is 170 kg), there is no restriction on yarn exports. Makers of yarn supply nearly 80 per cent of their produce to buyers abroad; it used to be 30-40 per cent. Revenue from export is higher than that from domestic mills.

“Upon getting an overseas order to be executed within 60 days, we generally try to secure raw material supply and immediately contact yarn manufactures. But, instead of supply at a fixed price and within a stipulated time, yarn manufacturers execute our orders in four-five stages, in 45-50 days. Between two supply consignments, yarn prices are raised 10-12 per cent. Indian yarn manufacturers cannot do the same thing with overseas buyers, as they fear losing the business. We enter into contracts with overseas buyers at fixed price. If raw material prices are raised substantially during the period, we will have no option but to close our units,” said Udani.

K B Agarwala, president of the Federation of Hosiery Manufacturers Association of India, has alleged unfriendly government policies are responsible for the trouble in the sector. Cotton yarn exports surged 35 per cent in the first half of the current financial year and are expected to surpass 800 million kg this year, as against 600 million kg last year. Yarn prices are 240 per kg (40s), a record high and an increase of over 80 per cent in the past year. As a result, fabric prices have also shot up by 40-90 per cent for various counts. The price of cotton has doubled from Rs 23,000 a candy (356 kg) to Rs 46,000 a candy over the past year, despite higher production.

While the cost of raw material has surged, that of final products has not, complains Udani. His solution: if the government allows export of only final products, the realisation of such products increases and the benefit will be automatically passed on to downstream players, including farmers.