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Weak demand impacts textile production negatively

Exports of raw cotton and waste from India plummeted by 58 per cent during the April-July period from a year before and those of man-made yarn declined nearly 6 per cent during this period. However, some of the other textile segments, such as jute and carpets, performed well during the April-July period with exports of jute growing 13.2 per cent and those of carpets by12.3 per cent, helping the overall textile exports achieve an under 1 per cent rise up to July this fiscal year.

Not just exports, even the production of textiles dropped in July from a year before, while that of garments gained 21.7 per cent during the month, according to the industrial output data. This indicates that not only export demand remains weak, but even domestic consumption is not picking up in textiles, so spinning mills have begun reducing production for the first time in five years. The fact that the government is yet to clear subsidy claims of around Rs 4,500 crore for investments made under the flagship Technology Upgradation Fund Scheme has further added to the woes of textile units.

Meanwhile fall in yuan as well as demand in the China market is hurting the Indian exports since many players heavily depend upon the country for their export share. China is the biggest market for textiles, accounting for over 70 per cent of India’s cotton and 40 per cent of yarn supplies. Experts predict that the Chinese market will witness a further decline in 2015 as well as 2016 putting pressure on Indian companies.

 
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