• Su­rat’s tex­tile sec­tor faces cost-push cri­sis as key in­put prices surge

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Polyester yarn prices in­creased 6-8 per cent in the past one month and 12-15 per cent in past 3 months Su­rat tex­tile weavers and pro­ces­sors have en­tered their third cri­sis in one-and-a-half years. In Novem­ber 2016, high-value cur­rency notes were with­drawn, paralysing Su­rat as its econ­omy was largely cash-based in­volv­ing small pro­ces­sors and mi­grant em­ploy­ees. Last July, the in­dus­try was shut for long af­ter the Goods and Ser­vice Tax was im­posed, ren­der­ing a big blow to tex­tile pro­ces­sors, whose cost in­creased sharply along with com­pli­ance bur­den. The lat­est is in­crease in polyester yarn prices by 6-8 per cent in the past one month and 12-15 per cent in past 3 months. To­tal cost in­creased along with other costs since Jan­uary has been put at over 30%. This is hap­pen­ing at a time when fab­ric de­mand is low. De­mand will re­vive only when the fes­ti­val sea­son be­gins a few months later. Due to an ex­tra month in Gu­jarati cal­en­dar, fes­ti­vals will start with a month de­lay. Most weavers’ co­op­er­a­tives and job works have to­gether de­cided to cut one shift. If yarn is not weaved and fab­ric is not pro­duced, job work­ers will not have that much pro­cess­ing work. Dhi­raj Shah, Man­ag­ing Di­rec­tor for the Shahlon Group ex­plains that crude oil prices are ris­ing con­sis­tently since many months. As a re­sult, prices of petro­chem­i­cals like DMT, PTA, MEG, etc. are also ris­ing. These are raw ma­te­ri­als for pro­duc­ing polyester yarn largely used by Su­rat based power looms and hence said that, “At the time when slack de­mand sea­son has be­gun, weavers have de­cided to cut pro­duc­tion.” Syn­thetic fab­ric has 5 per cent GST but yarn at­tracts 12 per cent GST. This means when sell­ing fab­rics, they will not be able to claim full GST paid of yarn and hence huge amount of un­used tax credit will re­main in their books.

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