Even as garment manufacturers are seeking a reduction in yarn prices, textile mills here contend they are forced to increase the cotton yarn prices as there has been a spurt in input costs.

A. Sakthivel, president of the Tirupur Exporters' Association, said recently that the mills had “increased the yarn prices abnormally, in an unexpected manner, during the last four months.” They had stopped supplying yarn for the past two weeks and exporters were unable to ship the goods on time. Though the yarn prices had gone up, the garment exporters were unable to hike the garment costs or get new orders.

According to S. Kandasamy, who has a weaving unit at the Palladam Hi-Tech Weaving Park, cotton yarn prices had gone up by Rs.15 to Rs.20 a kg in the last 15 days. If the prices were to go up further, the weaving units would find it difficult to continue operations.

Chairman of the Southern India Mills' Association J. Thulasidharan told The Hindu here that labour costs, cotton prices and power cost had all spiralled during the last two years. Labour cost had almost tripled during the last three years.

The mills were hit by power shortage as they faced 30 per cent power cut and peak hour restrictions. Cotton prices had also shot up and remained higher than the Minimum Support Price this season. “The yarn prices are likely to go up further for the mills to sustain operations.”

Though the input costs were high, the textile mills had not increased the yarn prices for 18 months because of the economic slowdown. Now, the mills should purchase cotton needed for the rest of the season and those who had a moratorium need to start repaying the loans from 2011.

With pressure on prices, hardly any new investment had taken place in the last one-and-a-half years, he said.