Textile industry will drop down yarn prices due to the crude oil prices falling down.

With the crude oil prices falling a little below $ 50 mark, the impact has evidentally been seen in the polyester yarn and fabric in Surat. The industry will be reducing yarn prices by 30 per cent in order to remain in competition.

As against a price of Rs 120-130 per metre, polyester yarn has already fallen to Rs 80-90 per metre and may fall further. The effect of fall in prices of yarn will also be seen in other products in the polyester value chain like grey cloth and fabric.

"Several fabric manufacturing units and processing units have already begun reducing their prices. Due to competition, more reduction will be seen by January 2009. This is going to affect our profitability by another 30-40 per cent," said Devkishan Manghani, general secretary of Federation of Surat Textile Traders Association (FOSTTA). The Surat industry itself manufactures around 30 million metres of polyester fabric per day. With a fall in prices by 30 per cent, the industry fears the impact will be tremendous on the bottomlines.

However, during Olympics, the industry was reeling under pressure of skyrocketing prices in raw materials. According to Manghani, prices of dyestuff and chemicals had risen by 45 per cent to almost 100 per cent in some cases. "Post Olympics, the prices had come down by atleast 50 per cent in cases of some chemicals," he added.

Add to that, the industry is also facing possibility of further job cuts by January 2009. "With the number of orders decreasing, units have been mulling on job cuts since not much production is likely to take place. By January 2009, we might see more number of textile workers in Surat losing their jobs," said Manghani.