NEW DELHI — Apparel factories across India will close down today, the first such strike in the country’s clothing industry, to protest rising domestic cotton prices.
This story first appeared in the November 19, 2010 issue of WWD. Subscribe Today.
The industry is seeking a total ban on exports of cotton yarn, the primary material used in the industry, which employs some 80 million Indians indirectly. In April this year, in response to pressure from the industry, the government banned raw cotton exports. Although that ban was later lifted, further export restrictions were put in place in October.
“Because of cotton yarn exports, there is a serious problem of cotton yarn availability in the domestic market,” said the All India Apparel Export Promotion Council, an umbrella body that represents most apparel manufacturers.
It added that its representatives across India, the world’s second-biggest exporter of cotton after the United States, would meet government officials to push for a ban.
Cotton yarn prices in India have risen from 185 rupees, or $4.07 at current exchange, a kilo in August to an all-time high of 240 rupees, or $5.28, a kilo, in turn pushing up fabric prices. This was hurting ordinary Indians, the AEPC said, pointing out the cost of a lungi — a wraparound skirt worn by men across southern India — had risen to 85 rupees, or $1.87, from 50 rupees, or $1.10, two months ago.
But it is the cost to India’s growing clothing exports that is mostly worrying apparel makers. In Tirupur, a factory hub in the southern state of Tamil Nadu, 20 percent of knitwear makers had closed their operations, the AEPC said.
Globally, cotton prices have been rising to record levels after adverse weather destroyed crops in China, Pakistan and the United States.
China’s demand for cotton outstripped domestic production by 3.6 million metric tons in 2009 to 2010, widening a supply deficit and contributing to rising prices.
Next, a British clothing retailer has said it will increase its prices by up to 8 percent in the first quarter of next year because of rising costs. And Arvind, the world’s largest denim maker and a supplier to Levi Strauss & Co. and Gap Inc., which is based in the west Indian state of Gujarat, has raised prices by as much as 15 percent.
In India, cotton growers tell a different story from apparel manufacturers.
The Cotton Association of India, which represents farmers and raw cotton merchants and lobbies against cotton export restrictions, said earlier this week that output in the year from Oct. 1 could well exceed estimates after the heaviest monsoon in three years encouraged farmers to plant a record cotton crop,
Sales by farmers were 2.55 million bales as of Oct. 31, the association said. Domestic demand may total 26.6 million bales, leaving a surplus of 24.05 million bales — making it difficult for the government to further restrict exports.