Ahmedabad: Spinning mills in Gujarat find themselves in the eye of a storm, grappling with surging costs and a shrinking appetite for their products, be it on home turf or in foreign markets. Though cotton prices have eased slightly, they are still perched higher than their international counterparts.
To put it in rupees and candy (356 kg) terms, cotton futures hover between Rs 53,000 and Rs 54,000.
This price rift is not just denting the competitiveness of local yarn producers, it is also applying a vice-like grip on their financial stability.
Saurin Parikh, the president of the Spinners’ Association of Gujarat (SAG), sheds light on the situation: “The relatively higher cost of cotton in India compared to other countries is increasing the overall expense of yarn production. As a result, Indian yarn manufacturers face reduced competitiveness in the international market. Furthermore, the ongoing economic downturn in Europe and the US has led to a significant drop in apparel demand due to restrained spending. So, the demand for yarn has failed to rebound. In times of low demand, manufacturers cannot afford to raise prices.”
Even the domestic demand has recently suffered due to reduced discretionary spending, said industry players. Sanjay Jain, chairman of the national textiles committee of the Indian Chamber of Commerce (ICC), said, “The festive season has not brought the expected relief to spinning mills, as demand remains sluggish. Manufacturers are receiving fewer orders from finished fabric producers. The demand scenario is the worst over the past two decades, with the industry facing a sustained slowdown. Lifestyle alterations and a change in priorities when it comes to purchases are also reasons for the recent decline in discretionary spending.”
The waning demand has also affected the liquidity of the yarn makers. Additionally, SAG’s estimates suggest that the cotton inventory in manufacturing units has been considerably reduced. Parikh revealed inventory days for cotton stock have been reduced from 60 days to just 12 days.
source : The times of India
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