Indian textile/apparel industry hard times continue...

Even as the economic slowdown in the West continues to impact garment and textile exports from India, the domestic front especially the retail segment continues to worry player as they hope for some positive cheer during the festive season.

This, despite the fact, that many of them have been forced to put their expansion plans and investments on hold.

Alok Industries and Arvind, for example are looking forward to sales growth of 35 per cent and 30 per cent respectively compared to the almost 50 per cent growth they witnessed in the last two years. With exports as well as local demand moving south, investments in capacity and retail expansion has been held back.

While the period between May to September has seen poor sales, industry is pinning its hopes on the upcoming festive season. According to yarn, fabric and home textile players, the demand is certainly picking up ensuring higher capacity utilisation in the last one month. D K Nair, Secretary General of Confederation of Indian Textile Industry (CITI) says, textile players have witnessed an increase in orders which has led to higher capacity utilization. Things are not back to the good old days, but the situation is better now.

But theirs is still a reason to worry, because demand is only being seen in certain segments like denim and cotton. India’s garment exports fell by 10.5 per cent year-on-year to $1.1 billion (Rs 5,979 crores) in June due to weak export demand. Apparel Export Promotion Council (AEPC) figures reveal, exports stood at $1.2 billion (Rs 6,520 crores) in the same period last financial year.

Interestingly, while on one hand denim and cotton players are expanding their capacities to cater to growing demand and on the other hand slowdown in retail is impacting it negatively. So though many players availed of the benefits of Technology Upgradation Funds Scheme (TUFS) in the last few years to expand capacities, it is currently not being utilised. However, to improve the situation, TUFS is being made available for a longer period of time. “We are supporting the industry in every way, we are pushing for TUFS to be included in the 12th Five Year Plan,” said Panabaka Lakshmi, Minister of State for Textiles.

For the current fiscal, export target is pegged at $40.5 billion (Rs 2,20,158 crores), which seems unachievable given the current economic situation in major export destinations like Europe and the US.

Meanwhile, cotton textile segment too has been facing tough times with first cotton prices going above Rs 50,000 per candy (356 kg) a year and a half ago and later, cotton yarn spinning mills going on strike. By the time cotton prices corrected, most mills were in debt. As of now, around 300 textile companies have applied for debt restructuring of Rs 35,000 crores. Simultaneously, rising crude oil prices have made synthetic yarn costlier.

Thus the bottom line is that the textile and apparel makers are facing tough times with domestic retailers not placing fresh orders and export in general not showing any signs of immediate improvement.