Textile mills have increased yarn prices by Rs 5 per kg for all counts from January 20. Garment manufacturers say that mills are planning to hike it further from the beginning of next month. The Tirupur Exporters' Association (TEA) has urged textile mills to rollback the increase in yarn prices. Mills however defended the move citing high cotton prices.

The hike has been carried out at a time when the export orders have started coming into Tirupur and the exporting units are taking up their full efforts to regain the lost growth momentum, said A Sakthivel, president, TEA. Some mills have increased prices by Rs 8-10 per kg, he said.

T Rajkumar, chairman, SIMA said that the cotton prices have gone up and they are passing only a part of the increase (to garment makers). Prices of Shankar-6, the most widely used cotton variety, has jumped to around Rs 42,500 per candy (about 355 kgs) now. It quoted about Rs 37,000 per candy two weeks ago.

The cost of producing yarn goes up by Rs 4 per kg for every Rs 1,000 per candy increase in cotton prices, Rajkumar said. Mills sold the popular 30s count for Rs 200 per kg in January last year when Shankar-6 prices were ruling at around Rs 33,800 per candy. Mills are selling 30s count yarn only at around Rs 220 per kg now when they should actually be quoting at least Rs 10 per kg more considering the spike in cotton prices.

Sakthivel in his letter addressed to Rajkumar and Tamil Nadu Spinning Mills' Association president A P Appukutty stated that raw material costs would go up by about 3% due to the price hike. Raw material accounts for around 60% of the total costs of garment makers. The degree of impact caused by the price hike will place knitwear units in trouble.

Garment makers and textile spinning mills are at loggerheads yet again over yarn prices