Tiruppur Yarn Manufacturers Seek Garment Industry Support on Cotton Policy and CCI Role
Association calls for changes in CCI’s role, removal of cotton import duty and more balanced payment terms across the textile value chain
The Tirupur Yarn Manufacturers Association has sought support from garment manufacturers and exporters for measures aimed at addressing cotton price volatility, working capital pressures and the financial challenges facing spinning mills.
The association has urged the garment sector to support its representations to the Union government regarding the role of the Cotton Corporation of India (CCI), the removal of the 11% import duty on cotton, and timely payments to spinning mills.
Association Seeks Expanded Role for CCI
In a memorandum submitted to the Apparel Export Promotion Council (AEPC) and the Tiruppur Exporters Association (TEA), the yarn manufacturers association said CCI should not only procure cotton from farmers at the Minimum Support Price (MSP) but also maintain cotton stocks and support the textile industry with greater raw-material price stability.
The association referred to the China National Cotton Reserves Corporation, which maintains more than a year's cotton stock, as a model for its proposal regarding cotton stock management and price stability.
Office-bearers of the Tirupur Yarn Manufacturers Association met A. Sakthivel, Chairman, AEPC, and K.M. Subramanian, President, TEA, on September 19 to discuss the issues.
Working Capital Imbalance
The association also highlighted a working capital imbalance between spinning mills and garment manufacturers.
According to the association, several garment buyers and brands nominate specific ginners for cotton procurement. This can limit spinning mills' access to credit, while mills are required to make upfront payments when purchasing cotton from nominated ginners.
At the same time, the association said, garment manufacturers may continue to receive credit from spinning mills for extended periods, creating pressure on the working capital position of spinning businesses.
The association has therefore sought greater adherence to mutually agreed credit terms and timely payments from garment manufacturers.
Cotton Prices Continue to Influence Yarn Costs
Cotton accounts for approximately 65% to 70% of yarn manufacturing costs, according to the association.
It said domestic cotton prices had increased by around 30%, while international cotton prices had risen by around 50%, with the increase reflected in yarn prices.
More recently, international cotton prices declined from 91.55 cents per pound to 82.17 cents per pound, while yarn prices also fell from ₹384 per kg to ₹379 per kg.
Spinning Industry Faces Modernisation Challenge
The association also raised concerns over the pace of modernisation in the spinning industry.
According to its assessment, more than 70% of spinning mills have been unable to modernise in recent years amid sluggish yarn exports. Of India's 45 million spindle working capacity, more than 20 million spindles are over 10 years old.
The association said continued lack of modernisation could eventually contribute to a shortage of yarn.
Call for Cotton Duty Removal and Timely Payments
Against this backdrop, the Tirupur Yarn Manufacturers Association has sought support from the garment sector for the complete removal of the 11% import duty on cotton and changes to the role of CCI.
The association has also asked garment manufacturers to ensure payments to spinning mills within mutually agreed credit periods.
“We seek your cooperation in ensuring a more balanced payment mechanism across the value chain, particularly in view of the prevailing financial pressures on the spinning sector,” the association said.
The proposals come as spinning mills, garment manufacturers and other participants in the textile value chain continue to navigate changes in cotton prices, export demand and working capital requirements.