 "Woollen industry in distress")
India’s woollen industry is facing a double whammy, with demand for woollen products falling and prices of raw materials increasing. So far as wool production and consumption are concerned, India is largely import-dependant for finer quality wool, where Australia and surrounding regions are among the leading suppliers.
The Kashmir unrest has played a part because demand for making high quality products comes from the Valley, which has been hampered lately, impacting exports. Bigger Indian players like Raymond and brands like Monté Carlo and Canterbury have seen prices rising in pure wool segments.
According to the Wool & Woolen Export Promotion Council, exports of woollen yarn, fabric and made-ups have declined 48 per cent and woollen garments by nine per cent in the first quarter of the current financial year.
Besides, the unrest in the Kashmir Valley has wiped out nearly 50 per cent of domestic demand, say industry sources. India largely imports wool used in garments and shawls. Domestically produced wool is used for blankets and rugs.
Also Read: Wool Industry In The Doldrums
Market leaders like Oswal Woollen Mills and Raymond anticipate a price rise in the pure wool segment as substitute for Australian Merino wool is not available. Blending of woollen with synthetic fibre is also being mulled by companies but this is feasible only in select categories of yarn and fabrics. So, a part of the cost hike would be passed on to the consumer and the margins of manufacturers would also be squeezed because the entire burden of cost inflation cannot be passed on to buyers, owing to a price-sensitive market.
Jawahar Lal Oswal, chairman of Oswal Woollen Mills, said the demand for woollen garments has been tapering due to global warming as well as sluggish orders from Europe. The price of 20.5-micron wool has risen to Rs 800-900 from Rs 600-700 a kilo two years ago. However, manufacturers find it difficult to pass this on to consumers because it might further affect demand.
Oswal Woollen Mills, which owns the Monté Carlo and Canterbury brands, has resorted to blending of man-made fibres (polyester and acrylic) but this has limited scope.
Also Read: Higher Input Costs Affect Wool Exports
Also Read: Higher Input Costs Affect Wool Exports
According to Oswal, next year would be more difficult for the company. Till now, there were carryover stocks from previous years to offset the rise in raw material price but that cushion would not be available next year. Also, with Australian farmers losing interest in sheep rearing, there will be a shortage in raw material and prices will likely remain firm.
Ram Bhatnagar, vice-president and head of sales and distribution at Raymond, said an increase in the price of greasy wool was inevitable as supply would be limited going forward.
He said Raymond recently launched innovative woollen fabrics. Such products currently form seven-eight per cent of the total product basket and the company hopes to make it a growth driver for both domestic and export markets.
Large firms catering to niche markets have been able to beat the slowdown in demand with the help of innovation and marketing strategies but medium and small players are gasping for breath.
Mid-size manufacturers in Ludhiana and Amritsar are hit more by turbulence in Kashmir. “During pre-winter months, woollen fabric is in high demand by the Kashmiri artisans, who make embroidered garments. This year we have had to run our factories at one-third capacity as the business in Kashmir has been badly hit, said R K Khanna, who runs a factory in Amritsar.
Sushil Kaura, chairman of Wool & Woolen Export Promotion Council, said discussions are on with the Union textiles ministry for revival of woollen textiles industry. The industry has proposed to the ministry to abolish import duty on wool, customs duty on machines and machinery parts required for upgradation and increase in duty-drawback rates.
