A recent analysis by Confederation of Indian Textile Industry (CITI) has revealed a growing disparity between domestic and international prices of Polyester Staple Fiber (PSF) and Viscose Staple Fiber (VSF) in India for the month of July. This widening gap has ignited concerns among industry stakeholders, potentially impacting the domestic textile sector.

Domestic prices a cause for concern

The data shows, the average domestic price for PSF for MSME spinners in July was Rs 112 per kg, whereas the international price (based on CCF China Chemical Fiber website) was Rs 75.61 per kg, reflecting a substantial difference of Rs 36.39 per kg. This translates to a staggering 48.13 per cent premium paid by domestic players compared to the international market. Similarly, the domestic price for VSF stood at Rs 156 per kg, while the international price was Rs 128.21 per kg, resulting in a price difference of INR 27.79 per kg or 21.68 per cent.

This trend persisted throughout the month, with the price gap showing little signs of narrowing. In the second week of July, the difference for PSF widened to 45.90 per cent, while for VSF, it was 21.27 per cent. The third week saw a slight moderation, with the gap for PSF at 45.53per cent and VSF at 20.50per cent.

Reasons for the gap

The reasons behind this widening gap are multifaceted. Industry experts attribute it to a combination of factors, including high input costs, supply chain disruptions, and exchange rate fluctuations. Additionally, the government's policies and import duties on raw materials have also contributed to the inflated domestic prices.

The burgeoning price differential poses a significant challenge for the Indian textile industry. Domestic manufacturers are facing increased production costs, making their products less competitive in the global market. This could potentially lead to a decline in exports and job losses in the sector.

Also, the higher prices are being passed on to consumers, resulting in increased costs for textile products. This could dampen domestic demand and impact the overall economy.

Need for policy intervention

To address this issue, the government needs to take immediate steps to reduce input costs, improve supply chain efficiency, and rationalize import duties. Additionally, promoting domestic production of key raw materials can help mitigate the impact of global price fluctuations. Industry stakeholders are urging the government to intervene and implement measures to bridge the gap between domestic and international prices of PSF and VSF. This will not only safeguard the interests of domestic manufacturers but also ensure the long-term sustainability of the textile industry in India.