CITI, LKS, organize joint webinar to discuss labor codes

The Confederation of Indian Textile Industry (CITI) and Lakshmikumaran Sridharan Attorneys (LKS) held a joint webinar discussing the recently finalized Labor Codes. Experts agreed, the new regulations offer long-term benefits for the textile and apparel industry. By streamlining compliance and introducing flexibility, the codes are expected to enhance the sector's competitive standing.

However, speakers issued a caution regarding the economic impact of certain provisions, notably the ‘Floor Wage.’ Analysts said, implementing a mandatory minimum wage across the board could raise operating expenses for businesses. This concern is particularly acute for Micro, Small, and Medium Enterprises (MSMEs), which comprise a large portion of the spinning mill landscape. For these smaller spinning units, the increased labor cost could heavily squeeze already thin margins.

Adding to the regulatory pressure, the market for Man-Made Fibre (MMF) yarn remained shaky following the government's decision to withdraw Quality Control Orders (QCOs). The immediate impact on spinning was a period of price instability. Producers of Polyester Staple Fiber (PSF) were forced to reduce their rates, causing MMF yarn prices to ease down. Consequently, yarn buyers adopted a highly cautious, ‘wait-and-see’ approach. They were only committing to immediate inventory needs, anticipating further price declines. This hesitancy directly impacted spinning mills, which produce these yarns, leading to depressed demand and sales volume.

Finally, the entire textile value chain, including spinners who supply yarn for exported garments, was struggling with persistent export headwinds. The sector was seeing minimal benefit from the recent depreciation of the rupee because the advantage was being negated by steep US tariffs.