(fibre2fashion) -- The rise in prices of crude oil in the past few days, especially after the Iran crisis, has made yarn and fabric producers in India's biggest man-made fibre (MMF) hub a worried lot.
The MMF industry in Surat heavily depends on crude oil products for manufacturing various yarns like polyester filament yarns, spun yarns and blended yarns, which are used to weave fabrics.
Mr. Arun Jariwala, Chairman, Federation of Indian Art Silk Weaving Industry (FIASWI), said, "The increase in crude oil prices will affect Surat Textile industry in a manner that will increase the prices of yarn."
"Last time, when the crude oil prices went up to USD 150 per barrel, yarn prices increased by 20-25 percent. This time, while there will be no affect on cotton yarn price, the price of synthetic yarn is likely to go up by 10 percent. Hence, the costs will rise very high," he adds.
However, the impact will be relatively less on yarn manufacturers. He opines, "The yarn manufacturers will still be able to bear the increase in price of raw materials as there are few such units and they are also in a position to export."
Comparing how yarn and fabric manufacturers have fared, he says, "In the last two years, yarn exports have increased and the sector has a positive growth. But, the fabric segment has a negative growth. This means, they have exported yarn in greater quantities and at a lesser price, and thus sustaining high fabric prices in India. So, it will be difficult for the weavers and processors, and the consumers will prefer wearing cotton fabrics, rather than synthetic fabrics."
To ease the situation, Mr. Jariwala recommends, "The Government will have to decrease the excise duty not only on yarn, but also on purified terephthalic acid (PTA) and Monoethylene glycol (MEG), so that cost of production is reduced and yarn is available at a reasonable price to weavers."