Rising cotton rates spook Tamil Nadu textile companies.

CHENNAI: The surge in cotton prices that began late last year has begun to worry yarn and garment manufacturers based in Tamil Nadu who are grappling with inflated raw material costs as they struggle to hold their positions in the international export market. 

Last year, the state's textile entrepreneurs had resorted to importing cotton from African nations to circumvent price uncertainty usual during the turn of the year. 

The current cotton season's prices have risen in concert with climbing higher international prices since October last year, with the rates touching $85 cents a pound recently. Cotton prices in the country have increased sharply - nearly 14% towards levels around ?43,000 a candy. Holding at a higher level, they have led to need for higher stock for production among garment makers even as observers attempt to prevent panic buying as seen last year. 

"While the increase at this time of the year is usual, the aid of higher international prices is providing an additional boost," said K Selvaraju, secretary-general at Southern India Mills' Association, a Coimbatore-based association of cotton mills. "Farmers are also holding back stocks as a growing majority of them have begun tracking international market rates to adjust prices. Thirdly, Pakistan has begun import of Indian cotton to touch about 7-8 lakh bales this year while last year it was u .. 

An increase in raw material prices impacts manufacturing competitiveness, making Tamil Nadu's exporters vulnerable in the global market now populated by cheaper goods from Bangladesh, Vietnam and Cambodia. Tirupur's entrepreneurs have for long tried to cut down price of cotton access, including a tie-up with vessel charterers to ship in cotton from Gujarat instead of road transport. 

Tamil Nadu has not had a textile policy for years even as Gujarat and Andhra Pradesh continue to provide subsidies, besides central government schemes for technology upgradation. 

K Phanindra Reddy, Tamil Nadu's textiles secretary, said there could be some announcements in the budget regarding a textile policy in preparation for months now.