Exporters rise against apex textile body.

AHMEDABAD: Just when the Indian textile industry has been advised to focus on the domestic market post-recession, there is trouble brewing on the home front.

Rising yarn prices have united garment exporters against the apex industry body Confederation of Indian Textile Industry (CITI), questioning the confederation’s silence.

The apparel exporters represented by Apparel Export Promotion Council (AEPC) and Tirupur Exporters’ Association (TEA), India’s biggest knitwear cluster, have estimated an 11% drop in shipments over last year after a 10.30% rise in yarn (40s count) prices, among other factors. AEPC represents 8,000 exporters while TEA has 684 members.

After a one-day fast observed by unit-owners in Tirupur last week, the associations have now threatened to discontinue their CITI membership, thus putting a question mark on the existence of the apex body.

Exporters, the fag end players in the textile value chain, allege CITI is favouring the textile mills who they feel have jacked up yarn prices disproportionately vis-a-vis the input costs. Raw cotton prices (Shankar 6) rose by 1.79% (from Rs 28,000 per candy to Rs 28,500 per candy) in the last one month, however, yarn prices have gone up by more than 10%, the exporters point out.

Unlike the vocal stand taken by CITI against the hike in raw cotton prices and its exports, the confederation has maintained a stoic silence even as the exporters are likely to close the year lower with barely $9.7 billion exports.

Apparel comprises 45% of India’s total textile and clothing exports are worth $22 billion. When yarn prices rose from Rs 165.09 per kg to Rs 182.09 per kg affecting the margins, CITI, citing market dynamics, suggested the exporters should pass on price hike to consumers. The suggestion, as expected, angered the exporters. An industry player told ET: "Recovering the cost from our buyers is easier said than done. Why does CITI claim to be the representative of the entire value-chain when it is lobbying for just a handful of people (mill owners)."

CITI chairman Sishir Jaipuria however, says the accusations are unfounded. "While textile industry has to be garment-led, it is for the garmenters to command a better price from their clients especially when the price of raw material and intermediaries is increasing. In the past, we voiced our concern over raw cotton prices and their exports because of its limited availability. Now, owing to price hike of cotton, even the yarn prices have increased globally. This is sheer market dynamics. However, India’s cotton yarn exports have dropped by 28% (April-December 2009-10 versus same period in 2008-09), which signifies that more yarn was sold in the domestic market. We have to understand that spinners have got a breather after two years and I believe if yarn prices are remunerative, we would see more spinning units coming up in future," he said.

Apparel exporters are however, in no mood to buy these arguments. About 250 exporters of TEA had on April 2 resorted to one-day fast to mark their protest against the abnormal price hike. "The average yarn consumption per month by Tirupur exporters is 20- 22 million kg. We are unable to pass on the raw material price rise to our clients even as we have requested our buyers to increase the price of the garments by 18-20% due to rise in yarn prices, dyeing charges from Rs 15 to Rs 18 per kg and also appreciation of rupee against foreign currencies," said TEA president A Sakthivel.

Source : The Economic Times