Surat, Aug 23 (PTI) Surat’s textile units have begun voluntarily curtailing production, with some observing two-day holidays a week, as a sharp rise in polyester yarn prices amid the West Asia crisis has made fabric manufacturing financially unviable, industry representatives said on Sunday.

Around 1.5 lakh powerlooms in the city’s weaving sector have resorted to the voluntary production cuts, said Vishnubhai Patel, former vice president of the Federation of Gujarat Weavers Welfare Association (FOGWA) and former president of the Bamroli Weavers Association.

Surat, one of the country’s most prominent textile hubs, has 7 lakh to 8 lakh weaving units that normally operate round the clock in shifts, he said.

The sector employs more than one lakh workers, and the move could affect 40,000 to 50,000 workers, said industry representatives.

“The price of yarn and other raw materials has increased sharply in recent months. We purchased yarn at high rates, but we are not getting a corresponding price for the finished grey fabric because traders are also unable to sell it at higher prices in the market,” Patel told PTI.

He said polyester yarn prices had risen from around Rs 112 per kg to Rs 140 per kg, an increase of about 25 to 30 per cent, upsetting cost calculations.

“Our grey fabric, which earlier cost around Rs 16 per meter, should have become costlier by around Rs 5 after such an increase in yarn prices. But the market has accepted an increase of only around Re 1 to Rs 1.50," he said.

Patel alleged that yarn manufacturers had raised prices by 20 to 25 per cent more than what was warranted by the increase in their input costs, mainly due to disruption in the supply of crude oil in the wake of the West Asia conflict.

“Whether they (yarn manufacturers) have formed a cartel or not is for others to examine, but the increase in yarn prices is much higher than the proportional rise in raw material costs,” he said.

The ongoing conflict and geopolitical developments have led to sharp fluctuations in prices of inputs such as crude oil, purified terephthalic acid (PTA) and monoethylene glycol (MEG), Patel said.

PTA and MEG are derived from crude oil and they are the core raw materials used to make polyester yarn, which weavers then purchase to produce fabric.

As a result, weaving associations decided that reducing production was the only way to limit yarn purchases and bring down consumption until prices stabilise, he said.

“Nobody is being forced to shut down. It is entirely voluntary and depends on the feasibility of individual units. Some are observing a two-day holiday every week, while others have curtailed one shift. I myself have cut one shift in my unit,” Patel said.

Workers’ earnings are likely to take a hit as several of them are paid according to the jobs available, he said, adding that the industry was already facing a labour shortage as many migrant workers from Uttar Pradesh and Odisha had not fully returned.

FOGWA has advised weaving units to slow down production temporarily for the next month in the hope that yarn prices will cool and market conditions stabilise, Patel said.

“The industry wants to keep running, but at the current yarn rates, the costing does not work. We are therefore left with no option but to cut shifts or take voluntary holidays,” he said.

Ashok Jirawala, president of FOGWA, said the organisation and other industry bodies have made representations to the government over the rise in yarn prices and sought action against what he alleged was an artificial price increase by yarn manufacturers.

“If crude prices go up, an increase can be understood, but when crude has not increased proportionately, such a sharp hike in yarn rates makes no sense,” Jirawala told PTI.

He said the industry has also sought relief in customs duty to make yarn and its inputs cheaper. The representation was being pursued with the government, he added. PTI COR PJT NR