Synthetics hit by price hike

Unlike most other sectors the synthetic textile sector was unaffected by the recent global financial crisis and even achieved positive growth till recently. Exports during 2009-10 grew by nearly seven per cent at Rs 16,861 crores as

against Rs 15,767 crores during 2008-09. But of late synthetic textile exports are not in a healthy state due to global as well as domestic factors. Exports of synthetic textiles fell by one per cent to Rs 3,852 crores during April-June 2010-11 from Rs 3,898 crores in the corresponding period last year. The export scenario worsened, as exports dropped by around 20 per cent to Rs 3,464 crores in the second quarter of 2010-11 as compared to exports at Rs 4,910 crores during the same period of the last fiscal.

Indian exports to established markets like the UAE and Saudi Arabia are also hit even though upcoming markets like Pakistan and Afghanistan witnessed negative growth during this period. Some of the reasons being the global economic slowdown, sluggish recovery in the US and European markets and growing competition from China. But what has crucially affected synthetic exports recently is the abnormal rise in the prices of raw materials like fiber and yarn. Besides, the drastic reduction in duty drawback rates and the appreciating rupee against the US dollar have worsened the situation for exporters of synthetic textiles. Exports of synthetic textiles may fall short of the target of US 3.7 billion dollars fixed by the government for 2010-11. The plan to increase exports to $7 billion by 2013-14 may also be hit.

“Prices of polyester staple fiber have been increasing on almost daily basis. Polyester yarn prices have gone up by 40 per cent since October 2010. Higher prices and erratic availability are the major concerns industry is facing, without stability in prices how do companies offer their products in the international market?” questions, recently elected  chairman of SRTEPC (The Synthetic and Rayon Textiles Export Promotion Council) Vinod K Ladia. “The other problem is reduction in drawback rates for exports. The government had increased the duty in the last budget, and in spite of increase in duty, the drawback rates were reduced. It was reduced from an average of 10.5 per cent to 8.5 per cent. The National Fibre Policy says the taxes on manmade fibers and yarns should be reduced to 4 per cent from 8 per cent. Instead it was increased from 8 per cent to 10 per cent. These are the factors making us uncompetitive when compared to China, Indonesia, Thailand and even to some extent Pakistan” said Ladia.

SRTEPC has sought the government’s intervention in stabilizing fiber and yarn prices and in ensuring its availability for export production at international prices. It has also urged the government to immediately increase the duty drawback rates for 2010-11.Vinod K. Ladia, founder chairman of the Udaipur-based Shree Rajasthan Syntex Limited (SRSL), was elected chairman of SRTEPC on December 27, 2010. The council is engaged in the promotion of exports of synthetic and rayon textiles, and exports of these items now amount to Rs 19,775 crores. Ladia is also president of the Indian Spinners Association and former chairman of CITI and the Rajasthan Textile Mills Association.  The SRSL group is a leading supplier of polyester viscose yarn apart from being the largest exporter of polypropylene yarn from the country.