Textile mills and garment units in Tamil Nadu are seeking measures to improve cotton productivity and availability as cotton and yarn prices continue to fluctuate. Industry representatives have pointed to stronger global yarn demand, limited domestic cotton production and rising raw material costs as key concerns affecting local manufacturing units.
Textile Industry Raises Cotton Availability Concerns
With cotton and yarn prices continuing to fluctuate, textile mills and garment units in Tamil Nadu are looking for measures to improve cotton productivity and availability.
Ashwin Chandran, chairman of the Confederation of Indian Textile Industry, said the increase in global demand for cotton yarn is among the main reasons for volatility in prices.
Demand for Yarn Shows Improvement
International demand for yarn is better than it was over the last couple of years, while demand for cotton yarn has remained muted since 2023-24. Demand for textile products across the value chain started picking up last December.
Most textile units had maintained hand-to-mouth stocks over the past few years because of low demand.
Demand for yarn from China and Bangladesh has increased, while domestic demand for garments is also witnessing growth. This has contributed to a better market for medium-sized enterprises.
Hosiery yarn exports are mainly undertaken by mills in Gujarat, with comparatively lower volumes from Tamil Nadu.
Cotton Futures and Yarn Prices Rise
The cotton futures market increased to 92 cents for a pound before correcting to about 86 cents.
As a result, the price of cotton, the basic raw material, has fluctuated along with raw cotton prices. While landed prices of clean cotton have increased by ₹70, yarn prices have risen by about ₹95 a kg over the last one year, according to the industry.
The industry is calling for greater focus on improving cotton productivity in the country and ensuring raw material security.
Meanwhile, the Tiruppur Exporters and Manufacturers Association has urged the Central and State governments to ban cotton exports.
Tamil Nadu, particularly its western districts, has the capability to design and manufacture a wide range of textile products for both domestic and international markets.
The textile industry, which is predominantly driven by small and medium-sized enterprises, provides employment and livelihoods to thousands of people.
Industry Raises Concerns Over Cotton Supply
Since January this year, certain large spinning mills and traders “have been artificially restricting the supply of cotton, causing yarn prices to skyrocket and creating an unprecedented crisis for local manufacturing units—particularly the small and medium-sized ones,” alleged the Association.
The industry has also highlighted the gap between domestic cotton requirements and production.
Cotton Requirement Exceeds Domestic Production
Last year, cotton requirement was 350 lakh bales, while current domestic production stands at 290 lakh bales.
With the existing cotton shortage, the government removed the import duty (11%) on cotton and 62 lakh bales were imported. Despite this, cotton prices continue to rise.
The Association claimed that the continuing increase in cotton prices was due to artificial market manipulation.
It said the sustained rise in cotton prices has increased the cost of raw materials, resulting in garment orders being diverted to other States and countries.