Tiruppur knitwear units urge Centre to fix minimum floor price for cotton yarn

Tiruppur's knitwear manufacturers and textile mills in Tamil Nadu have jointly urged the Union government to fix a minimum floor price for cotton yarn, citing frequent and steep increases in yarn prices that they say have made it difficult for garment units to plan production and honour export commitments.

The demand was among several decisions taken at a recent meeting of the Joint Committee of the Tiruppur Knitwear and Textile Cluster, which brought together garment manufacturers from the knitwear hub and representatives of some textile mill associations in the State.

The committee proposed that yarn exports be permitted only when export prices rise above the minimum floor price, which would be worked out with reference to prevailing cotton rates. Such a mechanism, it said, would help prevent domestic supply from being diverted to overseas buyers when global prices are high.

Among its other demands, the committee sought the removal of import duty on cotton for five years, and priority supply of cotton from the Cotton Corporation of India (CCI) to mills in Tamil Nadu.

It also pressed for measures to check a practice it flagged as a source of price pressure: cotton bought from the CCI by large traders being routed for export or resold in the domestic market at higher prices. To address this, the committee said the Tamil Nadu government should procure cotton directly from farmers and supply it to mills in the State.

Turning to the mills, the committee asked them to revise yarn prices once a month or once every two months, instead of making frequent changes, so that garment makers can estimate their costs with greater certainty.

It further urged the Union government to constitute a committee involving all stakeholders to monitor and regulate raw material prices.

Tiruppur is among the country's largest knitwear manufacturing and export clusters, with thousands of units dependent on a steady and predictably priced supply of cotton yarn. Sharp swings in yarn rates feed directly into the cost of finished garments, most of which are made against orders placed months in advance by buyers in Europe and the United States.

The interests of spinning mills and garment manufacturers do not always align: higher yarn prices benefit spinners while raising costs for the units that convert yarn into clothing. The joint committee's composition, drawing on both segments of the value chain, suggests an attempt to reconcile these positions around a shared set of demands.

Neither the Union government nor the Tamil Nadu government has announced a response to the demands.