The Indian textile industry, which was hit hard by the global economic recession, is all set to witness a recovery in 2010, barring cotton textile exporters who may face another challenging year, global rating agency Fitch said today.
"There are clear signs pointing towards a recovery in India's textile industry in 2010... The recovery will be supported by a pick-up in export demand, government stimulus, improved liquidity, and a stable-to-growing domestic demand for textile products," Fitch said in its report.
The sector had witnessed over 2 per cent decline in exports at about $20 billion in FY09 compared with the previous fiscal.
While capacity to repay loans of domestically-focused and synthetic textile companies are expected to improve, cotton textile exporters could face another challenging year, as their capacity to repay loans has been more severely impacted by recession and may take longer to recover, the report said.
Fitch said demand fundamentals remain strong in the domestic textiles sector, but spending by consumers will remain value-driven, leading to pressures on the margins.
Fitch presented contrasting picture for export earnings of textile sector as export revenues are likely to improve this calendar year due to revival of demand overseas, but appreciation of the rupee will hit these exports.
Meanwhile, the rating agency came out with an index to track the collection efficiency of asset based securities, backed by commercial vehicle loans.
