"Indian textile industry faces crisis as demand dips", 9 December 2023

Inflation in buying countries amid the global economic turmoil and huge inventories with retailers are believed to have dampened orders as escalating costs, stringent quality control orders and import of garments, among others, are stunting growth and hamstringing competitiveness, reports The Hindu.

“Cotton prices are high, electricity charges are up, and there is no support from the centre or state governments,” says P Koti Rao, who heads the AP Textile Mills Association in Andhra Pradesh.

With hardly any option left, many factory owners are either selling off their machinery or scaling down operations to survive...

In the past couple of months, many factories across the textile value chain have either shut down and disposed of machinery or sold excess land to stay in business. They have curtailed working hours for labourers, impacting their wages. The share of textiles and apparel in the Index of Industrial Production has also shrunk.

An oft-repeated cause of the crisis is that the industry is going through a prolonged period of sagging demand in both foreign and domestic markets...The shipment of textiles declined 0.41% in April–October 2023, compared with the same period last year, even though it grew 24.29% in October 2023 as against October 2022.

Apparel exports saw an 8.08% degrowth in October and declined 14.58% in April–October 2023 compared with the same period last year.

Lack of long-term planning

Apparel shipments started declining last August, looked better in November and December 2022, but started registering negative growth again since January.

Raw material that constitutes 60-70% of manufacturing costs has become expensive in India, hurting the competitiveness of the industry, says SK Sundararaman, chairman of the Southern India Mills’ Association...

The Bangladesh factor

Palanisamy, who manufactures undergarments in Tiruppur and sells them in the domestic market, says a piece made in Bangladesh costs Rs25 while his product costs Rs30. Clothing Manufacturers Association of India chief Rahul Mehta said that those who compete on prices are affected the most because of imports...