India’s woollen industry is facing distress with decline in exports of woollen yarn, fabirc and made-ups by 48 percent and woollen garments by 9 percent in the first quarter of the current financial year, due to fall in demand for woollen products and prices of raw materials increasing, according to the Wool & Woolen Export Promotion Council.

Wool production and consumption in India is largely import-dependent for finer quality wool used in garments and shwals, where Australia and surrounding regions are among the leading suppliers. While domestically produced wool is used for blankets and rugs.

The Kashmir unrest has played a part because demand for making high quality products comes from the Valley, which has been hampered lately, impacting exports.

Market leaders like Oswal Woollen Mills and Raymond have seen prices rising in pure wool segemtns and anticipate a price rise in the pure wool segment as substitute for Australian Merino wool is not available. Blending of woollen with synthetic fibre is also being mulled by companies but this is feasible only in select categories of yarn and fabrics. So, a part of the cost hike would be passed on to the consumer and the margins of manufacturers would also be squeezed because the entire burden of cost inflation cannot be passed on to buyers, owing to a price-sensitive market

Jawahar Lal Oswal, chairman of Oswal Woollen Mills, said that the demand for woollen garments has been tapering due to global warming as well as sluggish orders from Europe. The price of 20.5-micron wool has risen to Rs 800-900 from Rs 600-700 a kilo two years ago. However, manufacturers find it difficult to pass this on to consumers because it might further affect demand.

Oswal Woollen Mills, which owns the Monté Carlo and Canterbury brands, has resorted to blending of man-made fibres (polyester and acrylic) but this has limited scope.

According to Oswal, next year would be more difficult for the company. Till now, there were carryover stocks from previous years to offset the rise in raw material price but that cushion would not be available next year. Also, with Australian farmers losing interest in sheep rearing, there will be a shortage in raw material and prices will likely remain firm.

Ram Bhatnagar, vice-president and head of sales and distribution at Raymond, said that an increase in the price of greasy wool was inevitable as supply would be limited going forward.

He said that Raymond recently launched innovative woollen fabrics. Such products currently form seven-eight percent of the total product basket and the company hopes to make it a growth driver for both domestic and export markets.

Large firms catering to niche markets have been able to beat the slowdown in demand with the help of innovation and marketing strategies but medium and small players are gasping for breath.

Mid-size manufacturers in Ludhiana and Amritsar are hit more by turbulence in Kashmir. During pre-winter months, woollen fabric is in high demand by the Kashmiri artisans, who make embroidered garments. This year they have had to run their factories at one-third capacity as the business in Kashmir has been badly hit, said R K Khanna, who runs a factory in Amritsar.

Sushil Kaura, chairman of Wool & Woolen Export Promotion Council, said that discussions are on with the Union textiles ministry for revival of woollen textiles industry. The industry has proposed to the ministry to abolish import duty on wool, customs duty on machines and machinery parts required for upgradation and increase in duty-drawback rates.

As per industry sources, the unrest in the Kashmir Valley has wiped out nearly 50 percent of domestic demand.