Bhiwandi’s textile weaving sector is reeling from a relentless climb in yarn costs that began in March. Merchants report that quotations for several varieties have jumped by 60-70% over the last six months.
Powerloom operators have borne the brunt of the dearer raw material, and many are watching their margins erode because cloth prices have failed to rise in tandem.
One of Maharashtra’s leading powerloom and textile hubs, Bhiwandi hosts a dense web of weaving, processing, trading and support businesses.
Weavers warn that if the mismatch between input and output prices persists, the strain could steadily ripple through the whole supply chain.
Traders call for government scrutiny
Grey-cloth merchant Bablu Thakur has asked the authorities to keep a close watch on the yarn market and probe the causes of what the trade regards as an abnormal price spike. Increases have been especially steep in several widely used grades.
Shehzad Ansari, proprietor of Sadeya Textiles, outlined the scale of the rises. Micro yarn has moved from Rs 109 to Rs 160 per kg, and full dull from Rs 118 to Rs 178.
While, polyester has climbed from Rs 150 to Rs 225, magic yarn from Rs 155 to Rs 235, and cotton from Rs 270 to Rs 355 per kg.
Margins under pressure
Rehan Ansari, proprietor of Ayyub Textile, said micro and polyester yarn had gained close to 50% between February and September. Finished cloth, meanwhile, is still changing hands about 30% below what it costs to produce.
With inputs soaring and returns so meagre, staying in business is getting harder by the day.
Merchants explained that weavers cannot pass on the full increase on to customers, since grey-cloth prices have not kept pace. The gap between production cost and selling price is therefore eating into the earnings of weaving units.
Speculation allegations
Firoz Nawab of Nawab Textiles also questioned the part allegedly played by large agents and speculators in the yarn trade.
He claimed that certain big dealers based in Mumbai and Gujarat had made exceptional profits over the past six to seven months.
He wants their business dealings, assets and financial transactions examined to establish whether market manipulation or unfair trade practices helped drive prices upward.
Imported fabric adds to the burden
Merchants have likewise voiced alarm about finished fabrics arriving from China, Indonesia and Taiwan. Industry spokespeople say the imports reach the Indian market through major trading centres including Mumbai, Surat, Ahmedabad and Delhi.
Their contention is that domestic producers are being pincered, with dearer yarn on one side and competition from imported cloth on the other.
Ehsan Ansari of Mahasagar Group, joined by fellow traders, has pressed the Centre to revisit its finished-fabric import policy and act if any category of imports is shown to be harming local manufacturers.
Industry figures added that the announcement of fresh textile parks will not, by itself, relieve the pressing problems of existing units.
They are seeking greater focus on production costs, market conditions, liquidity and jobs within established textile clusters.
Fears for the wider chain
“The trade fears that further yarn price rises, combined with lacklustre demand, could hurt the whole textile ecosystem,” Free Press Journal reported.
Spinning mills might see orders from manufacturers weaken, with transporters, warehouses, dyeing units, processing houses and powerloom operators likely to feel the effects in turn.
Nirav Seth of Kanhaiya Textiles noted that Bhiwandi, Surat, Ichalkaranji, Malegaon and Erode are home to thousands of small and medium-sized units reliant on the textile trade.
Many of these, he said, run on borrowed money and monthly repayment obligations, so their financial load could grow heavier if costs keep climbing while realisations stay depressed.
Image courtesy: Midday
