Textile manufacturers in Palladam, a key hub in Tiruppur, have reduced production by 50% from 6th April, citing mounting inventory and a sharp decline in export demand linked to the ongoing Gulf conflict.

According to industry sources, large volumes of grey fabric have remained unsold as overseas buyers have deferred or cancelled orders, pushing the sector into a period of acute stress. The downturn has been further exacerbated by seasonal year-end financial closures, which have slowed fresh order inflows.

Industry representatives indicated that input costs have risen significantly, with cotton prices climbing to around Rs. 7,000 (US $75) per kilogram, while polyester and rayon costs have increased by more than 30%. They noted that despite these escalating costs, manufacturers have been unable to pass on price increases to buyers, thereby intensifying financial losses.

The representatives urged the Central government to abolish the 11% import duty on cotton and to regulate yarn exports in order to stabilise domestic supply and pricing. They cautioned that in the absence of immediate intervention, production could face a complete shutdown.

The region’s textile ecosystem remains heavily impacted by the slowdown. Approximately 2.5 lakh powerlooms and 20,000 shuttle-less looms operate across Tiruppur and Coimbatore, collectively producing nearly 2 crore metres of grey fabric daily, valued at around Rs. 100 crore (US $10.74 million).

However, with unsold inventory accumulating and demand remaining subdued, the crisis is beginning to affect sales and cash flows across the sector. Industry stakeholders warned that the prolonged downturn poses a serious threat to the livelihoods of lakhs of workers dependent on the textile value chain.