Geoff Krasnov offers apparel/clothing/garment manufacturing and sourcing news.

Wednesday, March 02, 2011

Branded Apparel Made in India to Increase 25%

In their latest move, the government of India has enacted a 10% excise tax on exported branded apparel. Combined with the ongoing increasing cotton prices it is anticipated that the overall effect will be in the neighborhood of 25%. Additionally, the government has passed a new minimum wage increase of 15% which took effect February 1st 2011.

Domestically, we continue to see increases on a monthly basis on the cost of cotton yarns. The basic count of 18/1 100% cotton open end yarn is now quoting in the $2.35 range (compared to $1.02 last year). The finer counts in ring spun , especially organics, have increased at a more rapid rate. 30/1 organic was $1.85 last year and is now being quoted north of $3.70 a pound. Compounding these ongoing increases in cotton are freight and energy surcharges as gasoline and heating oil march northward. There is also word that companies are maxing out their credit limits as factors watch the trade with nervous oversight. This is resulting in a tightening of inventory levels as more dollars buy less and less pounds.

Another area to watch is quality, as cotton fiber becomes more difficult to procure. Inevitably, fiber that was once set aside for lesser products will be finding its way into higher channels. Issues with barre, contamination and color may begin to become more prominant.