India’s Textile Exports Turn Costlier On Higher Input Prices

Textile and apparel shipments from India, the world fifth-largest supplier, have turned costlier as demand spiked and input prices rose.

Exporters say prices are up 10-25% on various categories. The U.S. has driven consumption of apparel and home textiles as the world’s largest economy recovers from the pandemic. And the price of benchmark Shankar 6 cotton rose from an average of Rs 33,850 a candy in June last year to Rs 50,300 a candy in 2021. Other costs have spiked too.

“Labour migration, logistics costs and also shortages of containers and higher freight costs have pushed up prices,” said Kailash Lalpuria, executive director and chief executive officer at Indo Count Industries Ltd., a supplier to global chains including Bed Bath & Beyond, Walmart and Coles. While cotton prices have receded from highs, he said, they are still higher than last year.

India exported textiles and apparel worth $36.4 billion a year before the pandemic with a 4% share in the global trade, according to the 2021 annual report of the sector. But exporters are increasing prices when the nation faces competition from countries like Bangladesh and Vietnam. And Covid-19 disrupted supply chains and demand.

Fabric contributes 30-40% of garment manufacturing costs. And since cotton has turned costlier globally, other exporting countries are also likely to increase their prices, according to Rahul Mehta, chief mentor at the Cotton Manufacturers Association of India.

While a lot of manufacturers are still disposing of stock from last year, they are not renegotiating contracts yet, he said. But new contracts are priced higher.

Lalpuria said India still dominates the textile market after China and other exporting countries depend on India for cotton and cotton yarn. And his company has been able to work out prices with customers.

While India has lost out to Bangaldesh and Vietnam in apparel, it still ranks No. 2 after China in home textiles and yarn categories, according to the 2021 annual report of Indian Textile and Apparel Industry.

And Indian textiles are already 30% cheaper compared to China’s and so it’s easier for domestic suppliers to increase prices despite global competition, Lalpuria.

According to Mehta, export prices have gone up by 10-12%. Manish Mandhana, joint managing director at The Mandhana Retail Ventures Ltd., pegged the increase higher at 20-25%.

“This comes at a time after we have faced low sales in 2020 due to Covid,” said Mandhana, who counts Inditex, the owner of brands including Zara, Primark and Mango, as a client. “Importers will have to bear the brunt of high costs.”

The Vardhaman Group, a supplier of fabrics, is still watching the situation. “If costs continue to remain on the higher side, then we will look at pricing changes. But we will also have to see if the market is open to accepting this change.” SP Oswal, chairman and managing director of Vardhaman Group, told BloombergQuint over phone. “India is a major exporter of textiles and if all players increase prices, there will be some influence in the market.”