The war has disrupted a key maritime corridor and drove up oil prices, as well as freight rates and insurance premiums, fanning inflation across the world. While the announcements of a two-week ceasefire between the US and Iran, and Tehran’ decision to reopen the Strait of Hormuz, may help improve the situation, exporters are unsure whether these measures would bring lasting peace and how long it would take for trade to return to pre-war levels. All this when the manufacturers are grappling with increasing input cost, they said.
“Our raw material cost has gone up by 15% and the buyers are not ready to pay higher prices, as they are anticipating fuel shortage and energy shortage in their own countries which may pinch the pockets of consumers and dissuade them to spend money on new clothes,” Tiruppur Exporters Association president KM Subramanian said.
“Not only new orders, the US and European buyers are not willing to pick up garments for their earlier contracts as well,” he said. “They are negotiating hard to bring down the price. Demand from the Gulf countries has come to a grinding halt due to the ongoing war.”
Textile hubs such as Tiruppur in Tamil Nadu are seeing order deferments and rising logistics costs as Gulf buyers turn cautious, said Mohan Ramaswamy, founder and chief executive of Rubix Data Science, a credit assessment firm.