Textile units hit by drop in demand

May 23, 2023 08:40 pm | Updated 08:41 pm IST

COIMBATORE The last five-six months have been tough for the textile units in the region, especially those in the Micro, Small and Medium-scale Enterprises, while the engineering industries are seeing signs of revival.

MSME textile mills reduced production 50 % since Monday as there is no demand for yarn and prices are under pressure, said the mill owners.

A manufacturer of basic garments in Tiruppur said the crisis started last November and producers of inner garments in Tiruppur for the domestic market were hit by nearly 50 % drop in business from November, 2022 to February, 2023. Since March there is a marginal improvement in orders every month but the situation is still bad for the manufacturers.

“The manufacturers are citing several reasons for the crisis. But, I think the main problems were steep hike in cotton prices resulting in spiralling cotton yarn prices and the fall in the yarn prices in the last six-seven months,” he said. Cotton yarn prices almost doubled in 18 months after the first wave of COVID-19 and the manufacturers had no option but to increase the product price by almost 30 %. The yarn prices have reduced 15 % now and the manufacturers are reducing the product prices. This has led to financial problems for both, the manufacturers and distributors. So there is no demand for the products, he feels.

Garment exporters and domestic suppliers are hopeful of the market normalising in the coming months, those many units have started reducing or closing operations.

In the case of engineering units, president of the Coimbatore District Small Industries’ Association V. Thirugnanam said that compared to the situation six months ago, the order flow was better now for pumpset and general engineering units. The raw material prices are stable giving slight relief to the MSME units. But, the margins are tight, he said. In the case of exporters, some segments were doing well and the average capacity utilisation was 60 %-70 %, he said.

According to J. James, president of the Tamil Nadu Association of Cottage and Tiny Enterprises, almost 40 % of migrant workers who went home in February have not returned and this is affecting operations. The micro units are trying to operate 12-14 hours with the existing workers as the order situation has improved. But, the units were having cost pressures, he said. “We do not get even ₹ 180 an hour for job work and our operating costs are almost the same that amount that we get,” he said.

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