RK Vij, National President of the Textile Association (India) told Fibre2Fashion, “The ongoing US–Israel and Iran conflict has sharply inflated polyester feedstock costs, with prices of PTA and MEG rising 30–32 per cent, However, yarn prices have increased only 12–15 per cent, reflecting subdued downstream demand.”
India’s textile industry is facing acute stress as raw material costs have surged 25–32 per cent, while yarn prices have risen only 12–15 per cent amid weak demand.
Nearly 40 per cent of units have cut or halted operations.
Supply disruptions, high freight, and labour issues deepen losses, prompting urgent calls for GST reform, duty relief, and subsidies to sustain operations and competitiveness.
Supplementing this trend, global market inputs indicate that polyester producers are paying nearly 30 per cent more for petroleum-based raw materials amid Middle East supply disruptions and higher crude prices, intensifying cost pressures across the value chain.
Nearly 40 per cent of fibre and yarn units in India have shut or reduced operations due to unviable economics and weak demand, Vij said, adding that export shipments are also being hit by rising freight costs and logistical delays.
Dr. Jayesh Pathak, President of the Mumbai Yarn Merchants Association, said the industry is witnessing sustained losses as raw material prices have risen by 25–30 per cent while consumption remains slow. He also pointed to reduced PTA and MEG output due to refinery shifts towards LPG, creating supply shortages and further pushing up costs.
Global supply chain signals reinforce these pressures. Textile manufacturers in key hubs have reported production cuts and reluctance to procure high-cost yarn, while labour shortages, partly linked to rising living costs, have added to operational challenges.
Purusottam Parmananka, Joint Managing Director of the Tiruppur based Kasharinandan Knit Fabrics, noted that the polyester value chain is under dual pressure of high costs and weak demand. “This is the second consecutive season where cost pressures may affect export orders, as buyers may not accept price increases,” he said.
Vij underscored the demand-side strain, noting that the sharp rise in input costs has not translated into proportional yarn price increases due to weak market absorption. “While PTA and MEG prices have risen by 30–32 per cent, yarn prices have increased only 12–15 per cent because demand remains slow,” he said, highlighting the widening gap between costs and realisations. He added that downstream segments, including garments, are facing disruptions in both domestic and export markets due to shipment delays and rising freight rates. “The industry is under severe stress as demand is not keeping pace with rising costs, making operations increasingly unviable,” Vij noted, reinforcing the need for immediate policy support.
Vij urged the government to act urgently, saying the industry needs support “to survive amid war and severe disruption”. He called for duty exemptions on PTA and MEG to be extended for at least two more quarters, as the current relief is available only till June-end. He also demanded removal of the inverted GST structure, noting that PTA and MEG attract 18 per cent GST while fibre is taxed at 5 per cent. This, he said, locks up heavy capital in tax credits for long periods, worsening liquidity stress for units already facing closures and production cuts.
Dr. Pathak also called for immediate policy intervention to stabilise the sector, emphasising the need for financial and structural support. “The industry is facing continuous losses due to higher costs and weak demand. Survival is becoming difficult under the current conditions,” he said.
He urged the government to provide subsidies on power, land and machinery imports to ease cost pressures. Pathak added that poor industry economics are forcing units to rely on outdated, second-hand machinery, making modernisation unviable and further impacting long-term competitiveness.
While policymakers remain optimistic that upcoming free trade agreements could boost exports in the long term, stakeholders caution that immediate intervention is critical to prevent further capacity erosion and safeguard the sector’s global competitiveness.
Fibre2Fashion News Desk (KUL)
