Export orders for textile units encounter a setback during the delivery stage.
The textile landscape in Ahmedabad, the undulating trajectory of cotton prices has been instrumental in shaping the recent fortunes of the industry. As cotton prices retreat from their zenith, an upswing in textile orders is witnessed. However, the repercussions of earlier commitments made during the peak of cotton prices are surfacing, presenting challenges during the delivery phase.
Sources reveal that approximately 350 containers, comprising diverse textile products such as denim and spinning waste, find themselves entangled in various countries. The root cause lies in buyers' insistence on renegotiating deals, seeking concessions in light of the diminished cotton prices.
Complicating matters, delayed payments by buyers have contributed to the impasse in shipping. A spokesperson from the Spinners’ Association Gujarat (SAG) sheds light on the predicament, stating, “Various types of spinning wastes, pivotal in the creation of denim, carpets, and terry towels in some nations, are stranded.
While around 250 containers, including 100-150 from Gujarat, have reached their international destinations, buyers remain reluctant to take delivery, citing diverse reasons. Notably, shipments destined for Vietnam have grappled with significant issues over the past months.”
Against the backdrop of cotton prices hovering around Rs 60,000 per candy (356kg) in October at the onset of India's new cotton season, a subsequent settling at around Rs 55,000 per candy has ensued. The stability in pricing has triggered an uptick in export orders and domestic market demand since December, elevating the capacity utilization of spinning mills in the state to approximately 80%.
While the descent in cotton prices has rejuvenated export orders, the current pricing dynamics prompt buyers to seek concessions before fulfilling existing orders. A representative from the SAG underscores the unfolding scenario, stating,
“The denim sector grapples with a complex phase. Delivery issues have emerged post-container dispatches to certain African nations.”
Highlighting the financial strains, the representative adds, “Payment challenges persist, obstructing the acceptance of deliveries by buyers. This has had a direct impact on working capital. Over the past few months, nearly 100 containers of denim from Gujarat have encountered such impediments across various nations.
We urge the government to devise a mechanism and establish an agency to offer legal support to exporters in instances where foreign buyers resist delivery, leveraging price fluctuations as grounds for seeking discounts.”