New Delhi, April 3 (KNN) 25 per cent surge in the cotton yarn prices in just 5 weeks has raised concerns over the domestic manufacturers and cotton exporters.

Prices of cotton and cotton yarn have increased significantly over the past two months. While cotton prices have gone up by 14 per cent, that of cotton yarn increased by 25 per cent in the past two months alone.

Even the domestic garment manufacturers are finding difficulties in procuring cotton yarn due to sudden surge in prices.

Manufacturers are currently finding it difficult to pass the rise of raw materials prices to consumers. They fear that the demand for apparel products, both from domestic and international markets, would come down, which could affect their business.

In the current year (2012 - 2013), the cotton yarn prices have already crossed 900 million kilos, which is a record export of such demand in the neighbouring countries like China.

The Apparel Export Proposal Council (AEPC) has written to Anand Sharma, the Union Minister for Commerce, Industry and Textiles expressing on the issue of high cotton yarn prices prevailing in domestic market for export manufacturing.

“The situation now has become alarming and shocking to value-added garment export sector. 25 percent cotton yarn price increase in just 5 weeks has in-fact shattered planning of garment sector,” said Dr Sakthivel, Chairman of AEPC.

The chairman also said, “Whenever the demand in importing countries get increased, apart from increasing of cotton prices in the domestic market, the cotton yarn prices are normally hiked in the domestic market abnormally and on these occasions, there is no parity exists between cotton and cotton yarn prices, which is ultimately affecting the value added segments including garment manufacturers who are finding it difficult to cope with this crisis and finalize export orders.”

Further, Dr Sakthivel also expressed difficulty to implement the export orders just finalized as this may bring loss of buyers’ confidence in buying from India.

Domestic players also fear about the export opportunities to go, which came after two years of downward sentiment after the euro zone debt crisis hit global economies.

Meanwhile, AEPC has also raised the issue with the government and has asked for a ban on cotton yarn exports and only allow exports of 60’s count yarn and above. Else, consider the facility of duty drawback on the exports of cotton yarn be stopped forthwith. AEPC has also suggested that cotton yarn, like cotton, should be permitted to be imported duty-free, so that the prices of basic raw materials for the manufacturing of garments remains stabilised.

Other garment associations like TEA, CMAI, GEAR, AEMA, GEA, etc have also registered their concern on the high cost of yarn prices. (KNN)