The Noida Apparel Export Cluster (NAEC) wrote to Union Textile Minister Piyush Goyal asking him to “rescue the apparel industry from the cotton crisis”. According to industry representatives, the industry is in a severe crisis because of the high cost of cotton yarn and raw fabric leading to a steep hike in production costs. President of NAEC Lalit Thukral said that the price of cotton has gone up by 80 percent over the past couple of months.
“Despite being the second-largest cotton-producing country in the world, India is unable to provide cotton to the industry at reasonable rates. Notably, 75 percent of raw material used in apparel-making is cotton, and the price of the cotton per candy of 335kg has increased to Rs.74,000 from Rs.37,000 between October 2021 and January 2022,” he said.
Gautam Budh Nagar houses nearly 3,000 garment export firms and has been branded as the “city of apparel” by the Uttar Pradesh Government under the One District One Product scheme. It generates revenue of nearly Rs. 32,000 cr per annum through apparel export of the total Rs. 40,000 cr per annum revenue generated in Uttar Pradesh.
Neeraj Prakash, whose garment factory is located in Sector 63, added that this unexpectedly steep rise in the price of cotton is posing a serious challenge to apparel manufacturers and exporters, who are struggling for survival due to the sharp hike in production cost. “Indian exporters are losing export orders and facing tough competition in the global export market. As a result, importers and buying houses are losing confidence. If the prices remain unchecked, the price of summer clothes is set to increase,” he said.
In its letter to the Textile Ministry, NAEC suggested various solutions. “Steps like check on cotton export, removal of 10 percent cotton import duty, resumption of 5 percent rebate duty and development of a mechanism to regulate the prices of cotton and other raw materials will be beneficial to rescue the apparel industry,” the letter said.
According to Thukral, the apparel industry in India constitutes 20 percent of the total employment in the country. “With the cost of cotton increasing, the industry is also facing an increase in unemployment as exporters will not be able to sustain jobs. In addition to this, the most badly affected firms are MSME apparel production units that constitute over 80 percent of the manufacturing base,” he said.
On January 7, the Apparel Export Promotion Council had also written to the Textile Ministry complaining about the hike in cotton prices. Reported about the letter on January 10. However, there was no response from the Ministry. The office of Union Textile Minister Piyush Goyal could not be reached for response despite several attempts.
