Glut in cotton could lead to cheaper clothes

With a glut on the horizon, apparel makers are hoping a reduction in cotton prices would reverse a year-long trend of price increase. The Cotton Association of India has pegged production at 380 lakh bales this year, manufacturers are looking

forward to sourcing at lower rates and passing on the benefit to buyers.

The key determinant in apparel pricing, cotton rates has been on an uptrend. The 30-count cotton yarn sold by mills touched a high of Rs 240 a kg in September from Rs 200 in January this year. Although prices slipped to Rs 221 a kg in November, most manufacturers were not able to cash in on that because orders are usually booked six months in advance. On a year-on-year basis, the benchmark 40s-count yarn prices have gone up by 20 percent.

Garment makers have been pushing for duty-free import of cotton yarn as a price-stabilising measure, after the centre allowed raw cotton shipments into the country, said Mohan Sadhwani, Executive Director, Clothing Manufacturers Association of India (CMAI). “There are a lot of stakeholders in the supply chain, right from the cotton grower to the garment maker. So, this could take time.”

Vardhman Textiles, part of the Rs 5,252 crores Vardhman Group, which churns out 55 tonnes of yarn a day at its Ludhiana unit, said a reduction in yarn prices will depend on whether China goes ahead with the import restriction it is considering. D L Sharma, Managing Director, Vardhman Yarns and Textiles Ltd, says, “Yarn prices may come down in India if China decides to cut down on imports.” "Suppliers have raised fabric prices too by 30 percent over the last two years," says Jacob John, Brand Head, Louis Philippe. The Aditya Birla Group brand, which sources raw cotton, cotton yarn, and fabrics to make high-priced garments at its factory in Bangalore, says the brand has hiked apparel prices by 25 percent on account of rising raw material costs. “We’d like to give our consumers a reason to cheer,” but that depends of whether costs come down. Although the brand’s revenue has grown year-on-year, rising input costs have put operating margins under pressure.