Inflation in cotton prices trigger demand slump in textile and garments sector

New Delhi, June 20 (KNN) The Textiles and Apparel sector is seeing a demand drop of at least 10 per cent during the first two months of the current fiscal year 2022-23 as compared to the same time in 2021-22.

After seeing a rise of 41 per cent rise in India’s textiles and apparel exports to USD 44.4 billion in 2021-22, the increase in cotton and yarn prices is leading to a demand drop.

The price of cotton in India had more than doubled to cross Rs 100,000 mark per candy during the current financial year, leading to an increase in yarn prices too.

Industry bodies had approached the government seeking a ban on the futures trading of cotton and restrictions on cotton and yarn exports.

“Last year’s rise in exports was owing to pent-up demand in the US and Europe and China plus One Policy followed by several countries. Factories in India were also not much affected by the pandemic last year. Even the unlisted companies have performed well.

Narendra Goenka, chairman of the Apparel Export Promotion Council (AEPC) said “This year, demand has slowed down as raw material prices are too high.”

APEC also blamed the ongoing Ukraine crisis that resulted in a rise in energy prices as one of the major reasons for the dip in demand from the US and Europe.

During the last financial year, the majority of the rise came from the United States, which contributed to 27 per cent of India’s textiles and apparel exports, followed by 18 per cent by the European Union, 12 per cent by Bangladesh, and 6 per cent by UAE.

According to the media reports, new garment companies from countries like the Czech Republic, Egypt, Greece, Jordan, Mexico, Spain, Turkey, Panama and South Africa have started negotiating with the Indian companies following the lockdown in China. However, industry players say such orders are minimal compared to last year.  (KNN Bureau)