High yarn prices may cause lay-offs in hosiery industry

June 10th, 2010 - 8:04 pm ICT by IANS  

Kolkata, June 10 (IANS) The hosiery industry may soon face massive
lay-offs if the government does not take steps to reduce the prices of cotton yarn by cutting down exports, a manufacturers’ lobby said Thursday.

The prices of cotton yarn have jumped to Rs.190 a kg from Rs.135 in September last year in the domestic market, leading to buyers’ resistance and consequent drop in production, Federation of Hosiery Manufacturers of India (FOHMA) secretary B. D. Kothari said here.

“The supply of yarn in the domestic market has also become irregular. Our profit margin has dipped by 10 percent. In West Bengal, the production cut is 10-15 percent,” Kothari said.

The main reason for the escalating prices is the massive rise in exports of the yarn, produced mainly in South India. “Seventeen percent of the total yarn production in the country is exported now. The government should take immediate steps to reduce the exports.”

He demanded that the government impose export duty, ensure regularity in supplies in the domestic market and put in place a mechanism to check the abnormal increase in yarn prices.

“We have already approached the ministry of textiles. We have been assured action. But if that is not done, and the present situation continues for about a months, there may be large scale lay-offs in the industry,” he said.

The industry provides direct employment to a million people.

Kothari said the situation deteriorated sharply over the last 15 days forcing virtual closure of the Knitting units. “This chain effect of non-availability of knitted fabric will hit down the line processes like bleaching and dyeing, cutting and tailoring units,” he added.

He cited the examples of Pakistan and Bangladesh, which have taken measures to protect their domestic textile units by imposing export duties and reducing import duties respectively.

Tirupur in Tamil Nadu is the largest manufacturing centre of hosiery garments in the country, followed by West Bengal. Together, the two states account for 90 percent of the production.

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