India's textile industry is grappling with a sharp surge in input costs, with more than half of manufacturers reporting a 20-25% rise in raw material expenses, according to textile associations and company sources.
The spike is largely attributed to the recent increase in crude oil prices which has inched above $100/ barrel amid geopolitical tensions, which has significantly pushed up the cost of petroleum-derived inputs used across the textile value chain.
Nearly 60% of India's textile output is dependent on synthetic fibres such as polyester and nylon, both of which are crude derivatives. As a result, any movement in oil prices has a direct bearing on production costs.
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In the current scenario, polyester prices have risen by around 20%, while nylon costs are up about 5%. Additionally, the cost of dyes and chemicals has increased by nearly 20%, driving the overall dyeing process cost higher by about 30%.
The cascading impact of these increases has pushed up overall garment manufacturing costs by 10-15%, further tightening cost structures for textile players.
Compounding the issue, shipping and freight costs have surged 80-90%, adding another layer of pressure, particularly for exporters dealing with global supply chain disruptions.
Despite the steep rise in costs, companies are absorbing the impact in the near term* to avoid passing on higher prices to consumers and risking demand slowdown. However, industry players indicate that this approach may not be sustainable if the disruption continues.
If elevated costs persist beyond two months, companies are likely to consider price hikes, as margin pressures intensify.
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In the meantime, textile firms are focusing on boosting exports to cushion the impact, leveraging a relatively stable tariff environment in key global markets.
However, sustained input cost inflation and elevated logistics expenses could continue to weigh on profitability in the coming quarters.
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