The Union Minister of Textiles Thiru Dayanidhi Maran assured the industry that the Government will take adequate steps in the short, medium and long term to provide relief to the textiles industry. He was releasing the study report titled “Impact of Economic Slow Down on Textile and clothing Industry” conducted by ICRA Management Consulting Services Ltd. (iMaCS) on behalf Confederation of Indian Textiles Industry (CITI), Cotton Textiles Export Promotion Council (TEXPROCIL), Apparel Export Promotion Council (AEPC) and Synthetic and Rayon Textiles Export Promotion Council (SRTEPC) here today.
Thiru Maran said as part of a short term strategy, the Government will strive to rationalize fiscal structure, exempt Service tax, reduce interest rates on pre-and post shipment credit, and facilitate faster clearance of arrears of terminal Excise Duties and Central Sales Tax. As a part of the medium term strategy, the Government will impart momentum to the implementation of the Technology Upgradation Fund Scheme (TUFS), Scheme for Integrated Textiles Parks (SITP) and the Technology Mission on Cotton (TMC) in the XIth Five Year Plan period. In the long run, there is a need for improvement in the infrastructure, labour law reforms, and create a new business orientation by the industry in line with the global trends. In addition, the Minister stated that his Ministry will initiate consultation process immediately to form a National Fibre Policy. He urged the industry to come forward to give their inputs so as to create a single forum representing all stake holders of textiles industry.
Thiru Maran said that the major markets for Indian Textiles and Clothing (T&C) export are the United States of America and European Union and they are showing sign of recovery. However, there is a need to diversify T&C exports to new markets like Gulf Cooperation Countries (GCC) namely Bahrain, Kuwait, Oman, Saudi Arabia, Qatar and UAE, Africa, Latin America, Russia and Oceania. The Government will extend a helping hand to the industry to seek opportunities in the new markets, to withstand competition from our neighboring countries, and overcome protectionist measures being adopted by developed countries, said the Minister.
Saturday, June 27, 2009
Saturday, June 20, 2009
Indian Cotton Yarn exports - A huge decline
India’s cotton yarn and fabric exports have been declined sharply by 45% to $237 million in March against $435 million last year.
According to Commerce Ministry, country’s cotton yarn and fabric exports were fell by 11.8 percent to $4.10 billion during the fiscal 2008-09, due to the fall in the global demand on the back of economic crisis.
Similarly, according to the data, exports of manmade yarn and fabric also declined in March by 24.7 per cent to $201 million from $267 million in the year-ago period.
However, during the current financial year, manmade yarn and fabrics exports registered a growth rate of 3.6 per cent to $3 billion from $2.90 billion in the previous financial year.
Source: COMMODITY ONLINE
It means, India is recovering slightly from the turmoils, especially for man-made yarns and fabric exports...!!
According to Commerce Ministry, country’s cotton yarn and fabric exports were fell by 11.8 percent to $4.10 billion during the fiscal 2008-09, due to the fall in the global demand on the back of economic crisis.
Similarly, according to the data, exports of manmade yarn and fabric also declined in March by 24.7 per cent to $201 million from $267 million in the year-ago period.
However, during the current financial year, manmade yarn and fabrics exports registered a growth rate of 3.6 per cent to $3 billion from $2.90 billion in the previous financial year.
Source: COMMODITY ONLINE
It means, India is recovering slightly from the turmoils, especially for man-made yarns and fabric exports...!!
Indian Cotton exports may fall sharply as domestic prices rise
Having exported 85 lakh cotton bales in 2007-08, India might not even achieve its targets of exporting an estimated 50 lakh bales in 2008-09. And despite the latest estimates by the Cotton Association of India (CAI), which has put exports at 40 lakh bales by August 2009, the industry believes higher domestic cotton prices might limit exports to mere 30 lakh bales.
In 2007-08, India exported 85 lakh cotton bales, a majority of which went to China. However, ever since cotton prices played havoc in the domestic market, owing to abysmal 40% hike in MSP, not just the mills, but even traders and exporters kept off cotton purchase. The government’s decision to offer 5% incentive on export of cotton, too, has not seemed to have helped.
While CAI is all set to hold meetings with the Centre seeking extension of the 5% subsidy on export of raw cotton, Confederation of Indian Textile Industry (CITI) has been seeking that the government scrap this scheme with immediate effect. “The subsidy did not have any economic justification. While the government wants to encourage exports of raw cotton, it forgets to address the fall in exports of cotton textile products. How could the government make cotton uncompetitive to the domestic textile sector while enabling our competitors in South East Asia to avail of our cotton,” points out CITI secretary general DK Nair.
Source: ECONOMIC TIMES
In 2007-08, India exported 85 lakh cotton bales, a majority of which went to China. However, ever since cotton prices played havoc in the domestic market, owing to abysmal 40% hike in MSP, not just the mills, but even traders and exporters kept off cotton purchase. The government’s decision to offer 5% incentive on export of cotton, too, has not seemed to have helped.
While CAI is all set to hold meetings with the Centre seeking extension of the 5% subsidy on export of raw cotton, Confederation of Indian Textile Industry (CITI) has been seeking that the government scrap this scheme with immediate effect. “The subsidy did not have any economic justification. While the government wants to encourage exports of raw cotton, it forgets to address the fall in exports of cotton textile products. How could the government make cotton uncompetitive to the domestic textile sector while enabling our competitors in South East Asia to avail of our cotton,” points out CITI secretary general DK Nair.
Source: ECONOMIC TIMES
Thursday, June 18, 2009
A Stronger Rupee Tests the Fabric of India's Textile Exporters
These are troubled times for India's textile industry. As the rupee appreciates against the U.S. dollar, more and more small and medium-size firms are laying off workers or closing down. Industry experts say that in the southern textile hubs of Tirupur and Bangalore, a factory closes every week. Premal Udani, chairman of the Clothing Manufacturers Association of India, estimates that 500, 000 to 600, 000 jobs are at risk. As exporters struggle to secure profitable orders, the Ministry of Textiles' $25.06 billion export target for the fiscal year seems well beyond reach.
While the rupee has appreciated more than 15% compared with the dollar over the last year and a half, competing countries currencies have not appreciated correspondingly. "Our currency is destined to appreciate," said Anees Noorani, vice chairman and managing director of Zodiac Clothing, one of India's leading brands in men's shirts and ties. "But does the appreciation have to be as sudden or sharp as from 47 rupees to 39 rupees between July 2006 and now?"
The troubles come amid slackened demand from the Western consumer. With U.S. economic growth slowing, U.S. retailers have offered deep discounts. That has left India's exporters squeezed by customers who want more for less and by a currency whose appreciation provides less when they do make sales.
"Our competitiveness for the time being has gone away," said P.D. Patodia, chairman of the Confederation of Indian Textile Industry. The association estimates that for every 1% fall in the value of the dollar compared with the rupee, profit falls by 1.2%. "Some exporters will be permanently damaged and not all will survive," said Subir Gokarn, chief economist for Standard & Poor's Asia-Pacific.
This isn't the first time prices have shrunk. Free on board prices fell two years ago when quotas imposed by the Multifiber Arrangement were lifted. India's ready-made garment exporters, who contributed 3% of the global clothing trade, responded by boosting export values 30%. Ready-made garments now account for 43% of India's textile exports. "Exporters were helped in reducing costs by the disappearance of the quota premium expense," Udani said. "This time around the dollar is in a free fall, so exporters can't plan anything."
The United States is the largest buyer of Indian textiles and apparel, at 19% and 33%, respectively. That helps explain the degree of pain the dollar's fall has inflicted. Apparel and textiles together contribute more than 30% of India's net export earnings.
Supplier Consolidation
The currency-driven troubles come at an already-challenging time. Retailers are using a smaller number of vendors, bypassing traditional buying houses to source directly from a few chosen manufacturers. Committing large sums for expansion requires nerves of steel. "Unfortunately, interest rates overall in India, too, have moved up, from 7.5%-8% to 12%-13% per annum," said Rakesh Valecha, director of corporate ratings at Fitch Ratings India. So after a federal government interest subsidy for upgrading certain machinery, "the effective cost for exporters has gone up from 2%-3% per annum to 7%-8% per annum."
India is not well-suited for high-volume, low-margin production, Zodiac Clothing's Noorani said. "We have not built the kind of scale that Vietnam or China has. Nor do we have the productivity to compete with the best. I therefore feel that India has missed the bus with respect to this part of the textile outsourcing business. You can see that vendors of Wal-Mart and the like are now in distress and we have a crisis."
As recently as 2006, India, among the top five apparel exporters, seemed to be making rapid strides. The new outlook is a sea change from industry projections of exports doubling every year. "Today we are nowhere on that trajectory and are in fact selling at prices which are lower than what we sold at even five years ago," Udani said. Many small firms operate at net profit margins between 3% and 8%. "Thanks to low gross margins, any production loss quickly turns into a net loss as well," the Textile Industry Confederation's Patodia said.
Source: FIBRE2FASHION
While the rupee has appreciated more than 15% compared with the dollar over the last year and a half, competing countries currencies have not appreciated correspondingly. "Our currency is destined to appreciate," said Anees Noorani, vice chairman and managing director of Zodiac Clothing, one of India's leading brands in men's shirts and ties. "But does the appreciation have to be as sudden or sharp as from 47 rupees to 39 rupees between July 2006 and now?"
The troubles come amid slackened demand from the Western consumer. With U.S. economic growth slowing, U.S. retailers have offered deep discounts. That has left India's exporters squeezed by customers who want more for less and by a currency whose appreciation provides less when they do make sales.
"Our competitiveness for the time being has gone away," said P.D. Patodia, chairman of the Confederation of Indian Textile Industry. The association estimates that for every 1% fall in the value of the dollar compared with the rupee, profit falls by 1.2%. "Some exporters will be permanently damaged and not all will survive," said Subir Gokarn, chief economist for Standard & Poor's Asia-Pacific.
This isn't the first time prices have shrunk. Free on board prices fell two years ago when quotas imposed by the Multifiber Arrangement were lifted. India's ready-made garment exporters, who contributed 3% of the global clothing trade, responded by boosting export values 30%. Ready-made garments now account for 43% of India's textile exports. "Exporters were helped in reducing costs by the disappearance of the quota premium expense," Udani said. "This time around the dollar is in a free fall, so exporters can't plan anything."
The United States is the largest buyer of Indian textiles and apparel, at 19% and 33%, respectively. That helps explain the degree of pain the dollar's fall has inflicted. Apparel and textiles together contribute more than 30% of India's net export earnings.
Supplier Consolidation
The currency-driven troubles come at an already-challenging time. Retailers are using a smaller number of vendors, bypassing traditional buying houses to source directly from a few chosen manufacturers. Committing large sums for expansion requires nerves of steel. "Unfortunately, interest rates overall in India, too, have moved up, from 7.5%-8% to 12%-13% per annum," said Rakesh Valecha, director of corporate ratings at Fitch Ratings India. So after a federal government interest subsidy for upgrading certain machinery, "the effective cost for exporters has gone up from 2%-3% per annum to 7%-8% per annum."
India is not well-suited for high-volume, low-margin production, Zodiac Clothing's Noorani said. "We have not built the kind of scale that Vietnam or China has. Nor do we have the productivity to compete with the best. I therefore feel that India has missed the bus with respect to this part of the textile outsourcing business. You can see that vendors of Wal-Mart and the like are now in distress and we have a crisis."
As recently as 2006, India, among the top five apparel exporters, seemed to be making rapid strides. The new outlook is a sea change from industry projections of exports doubling every year. "Today we are nowhere on that trajectory and are in fact selling at prices which are lower than what we sold at even five years ago," Udani said. Many small firms operate at net profit margins between 3% and 8%. "Thanks to low gross margins, any production loss quickly turns into a net loss as well," the Textile Industry Confederation's Patodia said.
Source: FIBRE2FASHION
High Input Cost and Low Demand Hit the Indian Textile Industry
The outlook for the Indian textile industry for 2009 will remain grim as most of the developed markets are facing recession, leading to low textile demand.
The future outlook of the Indian textile industry is predicted to remain gloomy for 2009 due to negative impact of the recession on international markets, said an international rating agency Fitch Ratings, reported THE FINANCIAL EXPRESS.
Textile exports tumbled nearly 30% and the production contracted 20%-30% since April 2008. If one takes orders placed into account, then the export in the current year dropped even more. As per the available data, orders placed in the third quarter of 2008 by leading exporters slumped 15-20% on an average whereas the sales in domestic market slammed 10-15% on year-on-year basis.
The grim outlook for the Indian textile industry for next year is forecasted in the backdrop of forex losses and economic slowdown in the international market. These factors along with lengthening cash cycles and rising working capital requirements have put extensive pressure on the short-term liquidity of the industry.
Moreover, the impact of the global financial crisis was inevitable to fall on the Indian economy, resulting in drying up of investments in the country. Manufacturing sector will certainly see the direct impact of the crisis.
The Indian textile industry rallied under declining domestic demand and high input costs in the current year. Drop in demand from external markets (like the US and Europe, both absorb nearly 50% of the total production) created panic among manufacturers who have started trimming production in a phased manner.
Indian companies have adopted a policy of temporarily discharging workers to deal with menace of the global economic meltdown. Not only this, textile manufacturing units at major hubs like Delhi, Bangalore and Tirupur have been closed, rendering thousands of people jobless. The industry had asked the Ministry of Textiles to continue the interest subvention on credit for packing across value chain.
According to a Research analyst at RNCOS, “The global financial crisis has made the Indian textile industry to bleed white because it is driven by exports and the present scenario is likely to remain as it is until December 2009. As the effect of recession is higher on developed markets, the demand is expected to remain weak. This will be visible in the financial performance of exporters in the current financial quarter.”
Source: RNCOS INDUSTRY RESEARCH SOLUTIONS
The future outlook of the Indian textile industry is predicted to remain gloomy for 2009 due to negative impact of the recession on international markets, said an international rating agency Fitch Ratings, reported THE FINANCIAL EXPRESS.
Textile exports tumbled nearly 30% and the production contracted 20%-30% since April 2008. If one takes orders placed into account, then the export in the current year dropped even more. As per the available data, orders placed in the third quarter of 2008 by leading exporters slumped 15-20% on an average whereas the sales in domestic market slammed 10-15% on year-on-year basis.
The grim outlook for the Indian textile industry for next year is forecasted in the backdrop of forex losses and economic slowdown in the international market. These factors along with lengthening cash cycles and rising working capital requirements have put extensive pressure on the short-term liquidity of the industry.
Moreover, the impact of the global financial crisis was inevitable to fall on the Indian economy, resulting in drying up of investments in the country. Manufacturing sector will certainly see the direct impact of the crisis.
The Indian textile industry rallied under declining domestic demand and high input costs in the current year. Drop in demand from external markets (like the US and Europe, both absorb nearly 50% of the total production) created panic among manufacturers who have started trimming production in a phased manner.
Indian companies have adopted a policy of temporarily discharging workers to deal with menace of the global economic meltdown. Not only this, textile manufacturing units at major hubs like Delhi, Bangalore and Tirupur have been closed, rendering thousands of people jobless. The industry had asked the Ministry of Textiles to continue the interest subvention on credit for packing across value chain.
According to a Research analyst at RNCOS, “The global financial crisis has made the Indian textile industry to bleed white because it is driven by exports and the present scenario is likely to remain as it is until December 2009. As the effect of recession is higher on developed markets, the demand is expected to remain weak. This will be visible in the financial performance of exporters in the current financial quarter.”
Source: RNCOS INDUSTRY RESEARCH SOLUTIONS
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