Manufacturers of winter garments are feeling the heat of the recent sporadic escalations in the raw material prices more than the summer apparels producers as they have to use larger quantity of cotton and yarn to ensure higher GSM (gram per sq metre) levels.
Due to the price volatility, many knitwear exporters are apprehensive of taking further orders. They fear that the production cost might exceed the sale price of the apparels.
“Higher the cost of raw materials, lower will be the profit margins. This is because the unit prices at which the garments have been quoted to the foreign buyers at the time of taking orders cannot be changed by citing price fluctuations”, pointed out T. R Vijayakumar, vice-chairman of Confederation of Indian Industry (Tirupur district council).
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He pointed out that rise in the cotton prices by around Rs. 11,000 a candy in a month of which the rise of Rs. 7,000 per candy in a month and the subsequent increase in the prices of 30s count yarn price that were widely used in knitwear sector, had a cascading effect on the profit margins. “Unless the government machinery intervenes effectively with the constitution of special task force to stop hoarding, the problems of the small and medium scale garment producers will only get worse in the coming days.” The knitwear manufacturers also feel that the Cotton Corporation of India should release the cotton stocks directly to spinners.