India saw a decline in exports of woolen yarn, fabric and made-ups by 48 per cent and woolen garments by nine per cent in the first quarter of the current financial year. Demand for woolen garments has been falling due to global warming as well as sluggish orders from Europe. The price of 20.5 micron wool has risen to Rs 800 or Rs 900 from Rs 600 or Rs 700 a kilo two years ago. However, manufacturers find it difficult to pass this on to consumers because it might further affect demand.

India depends on imported wool from Australia for making garments and shawls. Domestic wool is used for blankets and rugs. Large firms catering to niche markets have been able to beat the slowdown in demand with the help of innovation and marketing strategies but medium and small players are gasping for breath.

During pre-winter months, wool fabric is in high demand by the Kashmiri artisans, who make embroidered garments. But business of mid-size manufacturers in Ludhiana and Amritsar has been hit by the turbulence in Kashmir. This year they have had to run their factories at one-third capacity. The unrest in the Kashmir Valley has wiped out nearly 50 per cent of domestic demand.