The textile industry in India as well as southern region is optimistic for an early revival of growth,” according to the Confederation of Indian Industry (CII) Southern Region quarterly industry and economic update for the textile sector.
The CII predicts that for the next few months, sales and profitability of the textile sector, especially mills and textile and clothing (T&C) units, could improve from the lows of 2008, as some fabric and garment production units have reported a modest pick-up in international demand. “This is expected to translate into higher demand for spun yarns. While spinners are reporting a slightly slack demand for cotton and polyester cotton yarns, polyester viscose yarn manufacturers continue to receive export orders,” CII stated in a press release here on Monday.
The textile sector’s financial performance was adversely impacted by the rupee appreciation in 2008, which made Indian T&C exports uncompetitive. Also, there was a gradual slowdown in the growth of cotton consumption caused by declining export sales and shrinking profit margins, and slowdown in domestic T&C production.
As per the CII study, due to sharp increase in operating costs, operating margins registered a steep decline in the financial year 2008-09. Even domestic demand showed signs of slowdown attributable to a slowdown in consumer spending.
The investments in textiles projects in the five southern states of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Puducherry added up to at least Rs 6,919 crore. State-wise, Andhra Pradesh has an estimated investments of Rs 3,379 crore, followed by Tamil Nadu (Rs 3,165 crore), Karnataka (Rs 270 crore), and Kerala (Rs 106 crore). Thus, two states—Andhra Pradesh and Tamil Nadu —account for around 95 per cent of total investments, the CII stated.
The industry expects that there will be about 8 per cent decline in cotton production in India, the second-largest producer of cotton in the world, accounting for around 20 per cent of world production, to 29 million bales during the current year. There could be about 5 per cent decline in domestic cotton consumption in 2009 but the CII study expects a marginal growth in consumption in 2010.
