Chennai: Higher cotton and synthetic fibre prices in India compared to the international rates are working against yarn producers and making Indian textile products less competitive in the global market. After remaining elevated in the June quarter, domestic fibre prices are 24 and 48 per cent higher than international rates in July.
Cotton fibre prices at the MCX have remained higher than the Intercontinental Exchange (ICE) prices in the June quarter. In May, the price differential was 13 per cent and it further widened to 15 per cent in May and 22 per cent in June. By the mid-week of July, the price difference between MCX cotton and ICE cotton prices rose to 24 per cent.
Similarly, polyester staple fibre prices in India were 32.7 per cent higher than that in China in April, 32.9 per cent in May and 39 per cent in June. Viscose Staple Fibre prices were 11.8 per cent higher in April, 15.8 per cent in May and 19 per cent in June.
By the third week of July, PSF prices were higher by 45.5 per cent and VSF prices had a differential of 20.5 per cent.
“This price differential is making the Indian yarn and value-added products less competitive in the international market,” said Sanjay Jain, MD of TT Textiles.
According to him, the Quality Control Order issued by the Bureau of Indian Standards is not giving quality approval to Chinese fibre to enter the market and this has created a shortage, leading to higher prices in the domestic market.
“QCO should be suspended on fibre and yarn till it is not equitably imposed on value-added fabric and garments. It is regressive to stop raw material imports to promote value-added imports,” he said.
While this is affecting the competitiveness of Indian goods, local producers also have a disadvantage due to preferential duty arrangements enjoyed by competitors like Bangladesh, Vietnam, Sri Lanka and Pakistan in major markets like Europe.
