The ongoing political crisis in Europe, Sri Lanka and Pakistan is influencing the global cotton and textile sector, manufacturing and the global economy.

Rising prices, inflation and the political crisis in some parts of the world have a direct effect on the recent presidential election in France. Concerns about the rising cost of energy due to the likely embargo on Russian gas and oil by EU countries are real among consumers, while making purchase decisions on items not essential.

The ripple effects of COVID-19 are seen in different sections of society, which is most evident in Sri Lanka. With the decline in foreign tourism, Sri Lanka’s economy has been hit hard, which has been in decline due to mismanagement for over a decade and heavy external debts. In addition to the economic fallout, the political crisis in Pakistan and Europe due to the Russian invasion of Ukraine is also adding to the pain.

These instabilities are impacting the global cotton and textile sectors. This is felt immediately in a major textile-producing country, say India. The economic and political crisis in some parts of the world should create favorable conditions for textile manufacturing in India, but this is not the case. The constant increase in the price of cotton is creating havoc in the Indian textile sector, leading to a drop in production and a reduction in the one-day working week in textile factories in India.

Sri Lanka is one of the leading garment producers supplying global brands. The lack of power and the current political crisis affect many sectors of the country. In many factories, production was reduced by 20%, which led to losses. Higher cotton prices are not absorbed by upstream products like yarn.

Cotton prices have doubled in one year and the current situation is worse than in 2011 when cotton prices were high. Textile factories in India are asking the Indian government to reduce import duties on cotton by 11%, which will create a level playing field with competing countries like Bangladesh, Vietnam and Indonesia.

As paradoxical as it may seem, there is a demand for cotton and cotton products even at high prices, which fuels the market. Indian mills turn to cotton from the United States and Australia because of the consistency of quality and traceability. Based in Aruppukkottai, India, Jayalakshmi Textiles is a 100% fine cotton spinning mill with 72,000 circular spindles and consumes approximately 9,000 tonnes of cotton per year.

While Indian mills are pushing for the abolition of import tariffs, cotton imported from the United States will be competitive with domestic cotton and will also lead to improved productivity due to its good quality in length and strength. The cotton sector in the High Plains and the United States should pay attention to the Indian market as it may provide additional opportunities for cotton exports. In this scenario, Australian cotton could be a strong contender due to the recently signed Indo-Australian Trade Agreement, which will provide immediate duty-free access to Australian cotton, up to 300,000 bales.

Careful inventory maintenance, negotiating with the government for adequate support, efficient workflow management and careful monitoring of the global situation are some short-term solutions for the global textile sector.

Dr. Seshadri Ramkumar is a professor in the Department of Environmental Toxicology at Texas Tech University.

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