Cotton prices, which were ruling at 47,500 (spot price per candy of 355kg) during September 2013, came down to 39,000 in December. But they have again increased to 43,000 now, mills said. Prices of 40s combed hosiery yarn for the corresponding months stood at 260 per kg, 241 and 256 respectively.

According to T Rajkumar, chairman, Southern India Mills’ Association, the cotton price rise alone would have an impact of 25 per kg on yarn, which has been only partly passed on to downstream sectors, which is unavoidable to sustain viability.

Garment exporters said that mills had increased yarn prices by 5 per kg for all counts twice in the last 10 days. This kind of pricing strategy of mills has put the garment sector in trouble, said A Sakthivel, president, Tirupur Exporters' Association in a letter to union textiles minister K Sambasiva Rao.

Stating that export units are getting orders after a prolonged demand contraction in the EU market amidst a gradual recovery in the US market, he said that any deviation in planning for overseas orders would have a cascading effect on stakeholders in the garment industry.

After getting rejuvenation through the arrival of orders, the increase in yarn prices have come as a major hit on the knitwear sector and it would be difficult to reach the set level (for exports) this year, Sakthivel said.