Clothing manufacturers and exporters expect orders to be impacted by around 20 percent because of higher prices of cotton and cotton yarn.
Industry players say cotton prices have gone up around 125 percent in the last one year due to lower yield, demand-supply mismatch and global supply chain disruptions and now overseas customers are reluctant to negotiate on higher prices.
“In the last one and half years, cotton prices have more than doubled and now customers are reluctant to place orders, said,” Gautam Nair, MD of Matrix Clothing Pvt Ltd and Chairman of Export Promotion committee of Apparel Export Promotion Council.
We estimate that overall exports could be impacted by 15 percent-20 percent because of this,” added Nair.
Echoing the same sentiment, Rahul Mehta of the Clothing Manufacturers Association of India said that the supply chain is slowing down due to lack of material which is leading to higher prices.
Mehta added that the full impact of higher prices will be seen when the next round of orders are booked in June and July.
Lower yield of cotton leading to tight supply for domestic and export purposes is taking price of cotton up and although customers did absorb some price increase till a few months, now customers seem reluctant to absorb any more price increase, said industry players.
Customers are either pausing purchases or are taking longer to confirm orders for apparel, they said.
This has now started impacting production in spinning mills with capacity already down around 20 percent, said Nair.
Not only export orders are expected to be hit, demand is seen to be impacted at home too.
Giving a view on this, Premal Udani, Managing Director of Kaytee Corporation Pvt. Ltd said that domestic demand for apparel has been good so far but now with higher prices, customers have started getting reluctant to pay more.
Amidst tight supply of cotton and higher prices, textile industry is of the view that government should reduce export of cotton at this time and focus more on finished product such as apparel.
