Tirupur Exporters Association (TEA) has signed an agreement with spinning mills to supply yarn at reduced prices to apparel making units.
As per the agreement, the price of 40s-count yarn has come down by Rs 8 to Rs 194 per kg, while the prices of 20s, 24s, 30s and 34s count yarn have been reduced by Rs 5 to Rs 157, Rs 165, Rs 177 and Rs 184 per kg, respectively.
The agreement says the prices will prevail at the agreed levels till the end of August 2010 and it would be applicable to all mills.
TEA officials have sent a copy of the agreement to Dayanidhi Maran, union minister of textiles and the prices, it is learnt, would be made applicable throughout the country.
The official said, the prices of yarn have been northbound over the last couple of months. Since July 2009, the spinning mills have been increasing prices by at least Rs 5-10 often. For instance, the price of 24s-count yarn was at Rs 122 per kg in August 2009 and it moved up to Rs 131 per kg in November, then to Rs 160.27 per kg in April 2010. Prices further escalated to Rs 155.27 per kg in May 1, 2010 and then to Rs 173.27 per kg in May 30, 2010.
Cotton yarn prices account for about 40% of the total production costs of the apparel making units. So any increase in cotton yarn price will have a great impact on the garment prices.
The contention of the spinning mills was that the prices have been enhanced in line with increase in cotton prices.
However, knitwear exporters say that the increase is not proportionate to the increase in cotton prices.
TEA official stated the talks between both segments of the textile industry has been going on for few months and now there is some kind of reprieve that too for a short period of time.
The increase in yarn prices will have an impact on the overall exports as the exporters are not able to pass on the burden to the customers. There is severe competition in the international market especially from countries like Bangladesh, China, Indonesia, Cambodia and Vietnam.