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Maharashtra powerlooms units get state government subsidy

Powerlooms, spinning mills, and garment units in Maharashtra get a power subsidy. The release of funds is expected to benefit textile and garment units in the state.

Energy accounts for nearly half the production cost in the textile value chain. While spinning mills across India are struggling to pass on the elevated cotton prices to consumers, textile manufacturers are facing falling exports. The ongoing economic slowdown in the country has lowered the domestic demand of fabric and readymade garments, resulting in a continuous squeeze in profit margins. While export volumes have seen some uptick in recent months, they remain lower than the levels seen in the preceding fiscal year. Both volumes and realisations have come under pressure in the first half of fiscal ’20 due to weak export demand amid increasing competition from other producing countries and sluggishness in domestic consumption levels. Higher domestic raw material cost, with Indian cotton prices trading at a premium to international cotton, have also contributed to the loss of export competitiveness. Domestic spinners expect performance in fiscal ’20 will be affected by tepid volumes and weak earnings in the first half of the financial year. This is the likely scenario even though the industry is recovering from the slowdown.