Perambalur textile units face liquidity crunch as synthetic fiber prices rise

The textile clusters in Perambalur and broader Tamil Nadu are currently facing a severe liquidity crunch due to the West Asian supply chain disruptions that has pushed up synthetic fiber costs to unsustainable levels. Since the start of the month, polyester staple fiber prices have increased by 15 per cent to nearly Rs 40 per kg, effectively erasing the operating margins for small-scale weaving and spinning units. Unlike integrated conglomerates like Welspun or Grasim, which maintain internal raw material hedges, these regional MSMEs are struggling to absorb a 50 per cent hike in interstate freight costs, which have risen to approximately Rs 650 per load.

Experts say, while the Cotton Association of India recently increased its crop estimate to 320.5 lakh bales, providing some relief to the natural fiber segment, the man-made fiber (MMF) sector remains in a state of paralysis. Without immediate government intervention or a stabilization of crude-linked derivatives, nearly 30 per cent of local processing capacity could face indefinite suspension. This difference in the market where high-end technical textiles thrive under PLI incentives while commodity-grade yarn producers face insolvency, indicates a growing rift within the domestic textile value chain.

Perambalur’s textile ecosystem primarily consists of decentralized spinning and weaving units specializing in medium-count polyester and blended yarns for the domestic apparel market. Historically a growing hub for garment subcontracting, the cluster now aims to diversify into technical textiles. However, current fiscal performance remains tethered to volatile global petrochemical pricing and export demand.