Sharp hike in Merino wool price hits domestic industry

Neeraj Bagga/Vijay C Roy

Tribune News Service

Amritsar/Chandigarh, Aug 20

A sharp increase in the price of Merino wool imported from Australia has put pressure on domestic woollen industry, particularly shawl manufacturers, knitwear units, manufacturers of suitings, shirtings and woollen garments. Punjab is the main cluster of India’s woollen units, followed by Haryana and Rajasthan.

Prices of raw Merino wool imported from Australia have risen between 30% and 200% depending on microns in the past 7-8 months, experts in the textile industry said.

The price volatility of raw material would impact the units in the upcoming winter season. As a result, prices of shawls, pullovers, coats and other woollen garments would be increased in the ensuing winter season. Exporters will, however, face the heat due to their export commitments at negotiated rate. Exporters fix rates with buyers much in advance.

According to insiders, to cut costs, some players may opt for man-made fibres like acrylic and polyester blend.  The raw wool which was available at Rs 1,200 per kg around 7-8 months ago is now costing Rs 1,600 per kg, industry sources said.

“India is one of the major importers of the Merino wool from Australia after China. The increase in price because of heavy buying from China would hurt the Indian exporters. The exports have already come down as the manufacturers are facing tough competition from Italy and Turkey,” Tirupati Balaji Exim Pvt Ltd Director Rahat Thapar said.

The increase in prices of raw material also casts its shadow over the Rs 3,000-crore Punjab shawl industry, mainly concentrated in Ludhiana and Amritsar. The other shawl industry centres are Jammu & Kashmir, Kullu in Himachal Pradesh and in the North-East.

Shawl Club of India general secretary Piara Lal Seth said, “We would be left with no option but to increase the prices which could be around 20-25%.”

Punjab accounts for 35% of the total exports of wool and wool-blended products, followed by Maharashtra and Rajasthan. The slowdown in global demand has affected medium-sized manufacturers in Ludhiana and Amritsar. India’s main export markets include the US, European Union and the UAE.

There are some manufacturers who have de-risked themselves from the volatility through advance purchase. Sandeep Jain, Executive Director, Monte Carlo, said his company would not be impacted as the order has already been executed. “The increase in prices will impact the next year orders which would commence in April,” he added. 

Ludhiana caters to almost 90% of the domestic demand for winter garments.