Spiraling yarn prices have rendered nearly one-third of existing garment and industrial processing units in Tiruppur idle, as business for these units has become largely unviable. In fact, many units are idle for many months with most of them getting outsourced orders from major garment exporters. Exporters from this knitwear hub, are unable to deliver orders from abroad and they fear this could lead to losing out to completion and orders moving elsewhere.
Prices of all kinds of cotton yarn have increased with prices of combed and semi-combed varieties reaching Rs 220-290 per kg in 2021. This led to cotton yarn mills increasing prices by Rs 30-40 per kg every month, from August 2021. Yarn prices across categories cross Rs 400 per kg in early 2022. Price hike resulted in a drop in production with exporters opting to buy yarn form mills, notes MP Muthurathinam, President, Tiruppur Exporters and Manufacturers Association. Domestic garment manufacturers also increased prices in North Indian market leading to distributors cutting back orders, he adds.
High prices make order negotiations difficult
Despite piling yarn stock, the Tamil Nadu Spinning Mills Association asked members to stop production recently. This led to a reduction in industrial consumption of electricity from a monthly average of 5.5 crore units to 4.5 crore units. From 11,300 industrial processing units that consumed power through LT service in the city, they rose to 12,400 units in December 2021, as per a TANGEDCO official. However, power consumption did not increase proportionately. Power consumption dropped by one crore units from June 2021- June 2022.
High yarn prices are making it difficult for garment exporters to negotiate orders, says C Ramasamy, Proprietor, Harvey Exports. Stakeholders fear the industry cannot survive if the price of yarn continues at this level and this could lead to huge losses to exporters. Hence, most units are either shut or operating with minuscule workforce.
Loss of jobs for migrant workers
Drop in production has affected workers too. High yarn prices have made these units un-operational with most running in single shifts. This is impacting migrant workers employed in these units, points out N Sekar, AI TUC Banian Union, Tiruppur.
A few export and domestic garment companies have stopped recruiting migrant workers from North and Northeast India, informs Sekar. Hundreds of inter-district migrant workers from Pudukkottai, Dindigul, Madurai, and Tiruvannamalai have already left Tiruppur. Revenue records show, the garment industry in Tiruppur employs over 1.30 lakh laborers from other states.
