Textile sector on an uptrend

The textile sector was facing a slowdown last year, but a surge in exports may help it to achieve a turnaround, say industry experts

The textile industry was hit hard by the global economic slowdown. However, it is now showing signs of recovery. Experts feel this is just the beginning of the growth story for this sector. According to government data, during FY09, textile exports from India grew by 8.1% to Rs96,309 crore. Higher prices for cotton overseas, a depreciating local currency and stimulus packages from the Union government were the main reasons for higher exports, say experts.

“A gradual improvement in the world economy and consequent rise in demand for textiles in most countries—especially in the major Western markets ahead of Christmas—has led to a boost in exports,” a source from the Synthetic and Rayon Textiles Export Promotion Council (SRTEPC) told Moneylife.

“With a lot of nations across the world recovering from the recession, the demand for textiles has grown,” said Textile Association of India’s (TAI) chairman KD Sanghvi.

According to the SRTEPC source, in the next few months, the demand for textiles from erstwhile markets like the US and EU will gradually decrease (currently India exports around 60% of textiles to these regions), but demand from new markets like Japan, Argentina, Brazil, New Zealand and Australia will see a rise.

Even as the rupee is appreciating against the dollar, industry experts believe that the demand for textile exports will continue to grow.

“By the end of the fourth quarter, the sector will get a boost from the rising demand for cotton which is set to increase by 10% while the demand for man-made fibres will go up by 7%-8%,” said HR Kapoor, managing director, Nahar Spinning.

“Indian cotton quality is higher and with the higher raw cotton price over the last year it is still lower then international prices. Higher cotton prices abroad have resulted in demand from India and Pakistan,” Mr Kapoor added.

However, according to Mr Sanghvi, in the remaining four months of the fiscal year, textile companies may not see a sharp rise in profits, but there will be an improvement.

There is a need for additional stimulus packages to attain the profits incurred a year before for the industry to compete with nations like China and South Korea which have “better trade norms”, said Mr Kapoor.

The segment could get an added boost as Dayanidhi Maran, the country’s textile minister, has called for a need to attract and sustain foreign direct investment in the sector for India to attain 4% share in global trade in textiles and clothing.

According to media reports, Mr Maran has also called upon major international players to collaborate with the Indian textile industry in the manufacture of fabric and setting up of greenfield units in textiles machinery, man-made fibre and yarn.

Maran believes that Indian textiles and apparel exports are expected to register a four-fold increase to touch $90bn-$100bn over the next 25 years.
- Aaron Rodrigues [email protected]

 

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