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Fibres, Yarns, Fabrics

Domestic Textile Industry Faces Newer Challenges

• By  Textile Excellence
• March 09, 2017

The domestic textile industry is currently passing through a difficult phase, even as country's GDP growth for the first quarter of the present fiscal year has come down to 5.7% (much below the expected growth of around 6.5%). Amidst Prime Minister's Make in India initiative, the manufacturing sector has recorded a sharp decline in growth in the first quarter of the current fiscal.

The growth rate at 1.2% as against last four-quarter average growth in excess of 7%, has been the lowest since June 2012 (0.7%). According to economists, factors that affected the growth include implementation of GST (led to destocking) and demonetization (affected consumer demand and SME segment).

Textile is one of the sectors that bore the brunt in a big way since a large part of the production is contributed by the small and decentralized segment. While the domestic consumption has moderated in the post-GST regime, cotton yarn exports, for the last few months have witnessed considerable decline of around 30%. As against over 100 million kg per month, the exports have hovered around 60-70 million kg in recent months. This has proved to be a double whammy for the cotton spinning sector which in the past has added significant capacities in the wake of various state governments announcing favourable policies to woo investments in the sector.

Decline in exports of cotton yarn has been attributed to the fact that Indian cotton yarn is unable to compete following the government withdrawing various exports incentives in the last few years. Moreover, China, the largest importer of Indian cotton has gradually reduced their imports as part of its new policy. India still ships 40 per cent of its cotton yarn exports to China. "Last few months have seen a major fall in cotton yarn exports. While we are paying 3.5% duty in China, many of our competitors pay zero duty. This along with removal of export incentives by the government has taken toll on our exports.

This decline has adversely impacted our spinning industry which is already faced with oversupply condition," says Sanjay Jain, vice chairman, Confederation of Indian Textile Industry, who believes that the industry at this difficult time needs some hand-holding from the government to tide over the situation. The announcement of new textile policy which is awaited for some time now, can not only chart the road map for the future but also boost the sagging sentiment significantly.

"Though it is a transition period for the industry, there are plenty of other challenges that are bogging down its growth trajectory. Some of them are the results of our lopsided policy measures. One of them is our efforts to ramp up our upstream segments without building up efficient capacities in the downstream. As a result, while there is over capacity in case of spinning, sectors like weaving and garmenting are not in a position to consume the raw material," states Shishir Jaipuria, chairman, textiles and technical textiles committee, FICCI and chairman and managing director, Ginni Filaments.

Jairpuria strongly believes that the Indian textile industry is losing its competitive edge in the global market. Here he believes that as a country, India will have to grow in sync with changing global order, even as there is enough scope to improve its efficiency. "Apart from other things, we as a country will have to negotiate very actively and aggressively to negate the adverse impacts of various trade blocs. Besides, there is also need to broaden the horizon of our market place," cautions FICCI textile chief who also believes that India is losing its advantage on the labour front as wages are increasing, even as the productivity and skill level continues to be stagnant

Textile Excellence