Spike in Covid-19 cases halts revival of Surat's synthetic textile industry

Business activity across value chain is at 5-10% of the pre-pandemic level

The recent spike in Covid-19 cases has halted the revival in Surat’s synthetic textiles hub. With roughly 215 fresh daily cases and the tally at 6,313 (with 200 deaths), business activity across the textile value chain — right from spinning yarn to making garments — has come to a near-standstill.

In addition, despite the rupee depreciating to Rs 76.97 a dollar between April and June, the industry has not been able to leverage it in terms of exports. Surat commands a 45 per cent share in total man-made fibre/synthetic textiles produced, as well as synthetic textile yarn, fibre, fabrics and made-ups, accounting for annual exports of $6 billion.

“On the one hand, business activity across the textile value chain had just begun, at 5-10 per cent of the original capacity. However, in the last 2-3 days, the spike in cases led to markets being closed again. On the other hand, the opportunity to make the most of the April-June period — in terms of domestic and export business — was lost, given the rupee depreciation,” said Rakesh Chaudhary, vice-president of the Nylon Spinners’ Association.

Pre-Covid, Surat would manufacture 20-25 million metres of synthetic textiles a day, down from the peak of 40 million metres before demonetisation and GST impacted capacity utilisation.

According to Chaudhary and Devkishan Manghani, advisor (textile trade committee), Southern Gujarat Chamber of Commerce and Industry (SGCCI), textile manufacturing and trading had touched 5-10 per cent of the original capacity.

However, civic authorities have ordered the closure of key textile markets, leading to a halt in business activity.

 

 

“If textile markets don’t operate, then the whole backward value chain will not know how much to produce, with inventory piling up,” said Chaudhary, adding that in terms of nylon chips alone as raw material, inventory levels have risen from 200 tonnes to 3,000 tonnes.

The other predicament facing the industry, especially in Surat, is that of Chinese imports of nylon yarn.

According to Narain Agarwal of the Synthetic and Rayon Textiles Export Promotion Council (SRTEPC), as against the domestic production of 120,000 tonnes, close to 25,000 tonnes was being imported, with China accounting for 58 per cent of the same.

The industry body has made representations to the government for imposing an anti-dumping duty on nylon yarn, which expired in January 2018.

“At a time when the domestic industry is suffering from lack of business, Chinese imports are adding pressure to the books of Indian nylon yarn producers. At present, imported Chinese nylon yarn is cheaper than the Indian variety by Rs 15-20 a kg, which is affecting domestic business even more,” said Agarwal.

Meanwhile, domestic nylon yarn attracts an inverted GST rate of 18 per cent on raw material caprolactam, and 12 per cent on the finished yarn — with manufacturers left with accumulated tax impacting their liquidity.