From powerloom factories in Udhna to dyeing mills across Surat, rising input costs driven by global supply chain disruptions have hit India’s textile capital.
Kesarali Peerzada has been running a textile weaving unit for nearly 25 years and has 48 powerlooms along with twisting and warping machines.
The rising costs of running his unit, he says, are directly linked to the West Asia conflict and the resulting shortage of Liquefied Petroleum Gas (LPG) following the disruption in crude oil supply. This resulted in thousands of workers moving to their hometowns
Before the gas shortage, we were paying Rs. 1.80 per metre to the labourers, and after they returned from their native place, they demanded a salary hike, and we are now paying Rs 1.95 a metre”, says Peerzada.
Peerzada says, “Even though crude prices have actually eased from a wartime peak of roughly USD 120 a barrel to around USD 95, the price of POY (Partially Oriented Yarn) hasn’t followed suit — it remains stuck around Rs 180 per kilogram, up from the Rs 140-150 range it was earlier.”
He attributes this partly to the fact that yarn pricing in India isn’t overseen by any regulatory body but controlled by a cartel.
Adding to this was the cost of power to run the mills. DGVCL, the state power distribution company, raised tariffs from Rs 7.30 a unit to Rs 9.15 a unit this year.
The squeeze runs in both directions: while costs for yarn, labour and power have all climbed, buyers further down the chain, the textile traders, who get grey fabric dyed and printed, have resisted paying more, insisting on old rates.
Peerzada adds that some traders understand and adjust, but increased competition has actually pushed the price of grey fabric bales down slightly, from Rs 13 to Rs 12.80 per metre.
Compounding pressures further, the Southern Gujarat Textile Processing Association (SGTPA), representing roughly 400 dyeing and printing mills in Surat, met on August 28 and announced an increase in charges for processing unfinished fabric, effective September 7.
This raises the cost traders pay to get grey fabric printed or dyed by about Rs 1.50 per metre, on top of the existing Rs 10-15 range.
SGTPA president Jitubhai Vakhariya linked the hike to the jump in coal prices driven by Strait of Hormuz disruptions affecting imported supplies from Indonesia.
Dyeing and printing mills rely on coal-fired steam, generated at high temperature, to fix dyes and chemicals onto fabric, using a roughly 60:40 blend of lower-grade lignite and higher-calorific imported coal.
Vakhariya said imported coal prices have risen by as much as 50% since the geopolitical situation changed in February, following the Iran-Israel-US war.
He says non-coking coal prices rose from around Rs 6,000 to Rs 9,500 per tonne, with individual mills burning 30-50 tons daily.
The hike has not gone down well with traders who are a critical link in the supply chain. The Federation of Surat Textile Traders Association (FOSTTA) met on September 2 and rejected the increase outright.
Secretary Dinesh Katariya argued that the SGTPA acted unilaterally without first consulting traders and has formally asked the association to roll back the change before it takes effect.
“Rangnath Sharda, joint secretary of the Surat Textile Market, described the roughly 30% price increase as unprecedented in the market’s history,” Indian Express reported.
“A saree that sold for Rs 200 last Diwali will likely fetch Rs 260 this year. The market itself represents over 75,000 shops and roughly 5 lakh people, with sarees ranging from Rs 200 at the low end up to Rs 25,000-30,000,” says Sharda.
Sharda, who sells to wholesalers in Tamil Nadu and Karnataka, noted that out-of-state buyers are pushing back, expecting old prices even as costs have risen at every stage from yarn to weaving to dyeing.
“We are in a bind. If we refuse to sell fabrics at old rates, buyers will find another firm, and we lose to competition willing to work on lower margins,” says Sharda.
