Rise in silk price: Silk rearers rejoice; weavers, traders and exporters in quandary

Silk weaving near Bangalore: depressedLast fortnight, when the price of raw silk soared to Rs 575 a kg, rising by almost 30 per cent since October, the 'queen of textiles' was at her costliest ever. At the Silk Exchange in Bangalore, which dictates the prices of raw silk throughout the country, brokers watched stunned as the price of filature silk yarn, a normal Rs 317.44 a kg in March, moved up rapidly to Rs 453.87 a kg by the end of September. By October it crossed the Rs 550 mark, and charaka silk yarn was not far behind, rising from Rs 237.55 a kg in March to Rs 425 a kg this month.However, the Indian silk industry - annual turnover Rs 250 crore - which had long been waiting for silk prices to rise, paradoxically finds itself in a twisted state. The 30 lakh silk rearers spread over 13 states, who produce 4,805 tonnes of raw silk annually, making India the fourth largest producer in the world, have cheered the record-breaking rise. On the other hand, the weavers, traders and exporters are in a quandary: a fair proportion of the 1,45,330 handlooms and the 6,077 powerlooms in the country may grind to a halt if the prices stay at their present high levels. Domestic traders complain that sales have dropped by more than 30 per cent and exporters fear huge cancellations of orders.Closing Shop: In Karnataka, where 65 per cent of India's silk is produced, the situation is chaotic. Of the 1,080 powerlooms in Doddaballapur, half have shut down. According to K. R. Narayan, president of the Doddaballapur Textile Manufacturers Association, never before have the prices risen this high or the weavers had to face such a shortage of yarn.After intense pressure was brought by the trade, the Karnataka Government had to hastily reduce the sales tax it imposed on silk goods recently. In the last week of October a seminar was organised by the industry to discuss the situation and after that the Karnataka Handloom Silk Cloth Merchants Association closed shop for a day and took out a mammoth procession demanding that the Government halt the price rise.Not everybody is alarmed by the price rise. An unruffled S.S. Meenakshi Sundaram, the bespectacled state director for sericulture, says: "Silk prices have not risen in the past three years, though every other commodity has moved up drastically. The hike was expected and is definitely welcome." Sundaram is on strong ground here for silk prices have been crawling up for the last three years and even fell steeply in 1978. And for the two lakh farmers engaged in sericulture, who watched the dreaded Uzi fly destroy almost 30 per cent of the crop last May, the hike was well timed - in fact the ravages of May were a factor in the rise. Another was the delayed monsoon. The resulting supply shortfall saw cocoon prices in the state's 22 regulated markets moving up from Rs 24.57 a kg in January to Rs 33.86 a kg last month.Complaints: Weavers complain that there is a tremendous shortage of silk yarn in the market, and they accuse merchants who corner most of the silk in the Exchange and sell it to Andhra Pradesh and Tamil Nadu. The yarn is usually twisted in Karnataka itself before being sold to other states, but a large number of twisters have reportedly cropped up in the neighbouring states depriving local twisters of their livelihood. However, the weavers' grumblings about the Silk Exchange have to be taken with a pinch of salt as the Exchange was originally set up to counter the 240 middle men who had held the industry in a vice-like grip.Another government agency which has come under fire is the Karnataka Silk Marketing Board (KSMB) which was set up by the state Government two years ago to ensure remunerative prices for the reelers and prevent drastic fluctuations in prices. The KSMB competes with other buyers in the Exchange and purchases around 5 per cent of the yarn. Kabadi Nagendrasa, president of the Karnataka Silk Exporters Association, blames the KSMB for the uncontrollable price rise, KSMB Managing Director Shantanu Consul argues that with hardly a crore of rupees at its disposal the KSMB can only maintain a 15-day buffer stock, quite insufficient to peg prices at reasonable levels.Exports: It is ironical that exporters are grumbling: only in March the Central Silk Board (CSB), which is responsible for the development of sericulture in the country, had announced that exports had reached unprecedented record levels - India's foreign exchange earnings from silk moved up from Rs 48.84 crore last year to Rs 53.12 crore, an 8.8 per cent increase.But, complains an exporter: "After the prices shot up we cannot compete in the international market. Many buyers want to cancel orders booked earlier, rather than pay the difference." The price of silk fabric abroad is now about the same as the price in India - Rs 50 a metre - and the coarser Indian silk might find it difficult to compete with the finer foreign variety.But CSB Chairman P. Basavaiya came down heavily on the exporters. Said he: "I don't see why they should make so much fuss. The price rise will give the necessary boost to the industry. Exports will not fall as the sellers can easily cushion any rise: they were making 500 per cent profit but now they will make only 400 per cent." Even as the bitter wrangling continues, all agree that the price boom will go on and that prices will climb down to respectable levels only by December. But the industry will have to break its cocoon of discontent before it weaves its way to the top again.Published By: AtMigration Published On: Oct 25, 2013 14:34 IST--- ENDS ---

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Rise in silk price: Silk rearers rejoice; weavers, traders and exporters in quandary

Last fortnight, when the price of raw silk soared to Rs 575 a kg, rising by almost 30 per cent since October, the 'queen of textiles' was at her costliest ever.

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