2 weeks ago

Indian textile makers face rising labour and material costs

Indian textile makers face rising labour and material costs
Indian textile makers face rising labour and raw material costs in FY27 · thehindubusinessline.com

Making clothes in India is getting more expensive for the companies that make them.

They have to pay workers more money because the government raised minimum wages.

The price of cotton and yarn, which is what clothes are made from, has also gone up.

Big clothing companies like Arvind, Pearl Global and Gokaldas are feeling this pressure.

These companies have a choice: they can make customers pay more, or earn less profit.

Some of the companies are buying machines to do more of the work automatically.

Other companies are building new factories in places where it costs less, like Central India, Bihar, Bangladesh and Vietnam.

The companies say the situation is temporary and are trying to pass higher prices to customers.

A weaker Indian rupee is giving exporters some help.

The companies hope things will get better over time.

Key facts

Affected companies
Arvind Ltd, Pearl Global Industries Ltd, Gokaldas Exports Ltd
Minimum wage increases
Haryana 38% (per Pearl Global) or about 35% (per Gokaldas); Noida 21%; Karnataka 5%
Pearl Global Q1 FY27 EBITDA margin
6.6%, down from 7.3% a year earlier, despite 27.4% revenue growth
Gokaldas Q1 FY27 India wage cost increase
₹20 crore, absorbed in the system
Arvind input cost inflation
Nearly ₹100 crore, primarily from cotton and yarn plus petrochemical-linked chemicals
Pearl Global Haryana factories
Four factories, with wage revision directly hitting the profit and loss account
Expansion plans
Gokaldas: Central India and rural areas; Pearl Global: Bihar, Bangladesh, and land acquired in Vietnam

Quotes

Sivaramakrishnan Ganapathi

Vice‑chairman and managing director of Gokaldas Exports

“The raw material escalation that happened within a short period of time has been particularly difficult because Arvind’s order books are typically filled three to four months in advance, with pricing fixed when orders are booked.”
thehindubusinessline.com
“In Q1 of this year, our India business saw a wage cost increase of ₹20 crore, and that has been absorbed in the system.”
thehindubusinessline.com

Sources

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