High oil prices hit fibre industry

Production and exports of synthetic and rayon textiles have come down owing to increasing crude price, which is around $57 a barrel now.

The raw materials used by the industry are petro-chemical products derived from crude oil.

Sources at Synthetic and Rayon Textiles Export Promotion Council (SRTEPC) said export of synthetic and rayon textile during September 2005 had declined. There was a decline of 8.48 per cent in rupee term and 3.89 per cent in dollar terms, compared with the same month last year.

In September, polyester filament fabrics export declined by 26 per cent to Rs 175.57 crore. Blended fabrics such as polyester viscose and polyester cotton declined by 9 per cent and 20 per cent respectively. Viscose Spun Fabrics has shown a considerable fall of 92 per cent during September 2005.

"The Rs 1,30,000 crore Indian textile industry has lost hope amid rising crude prices and fierce competition from China. The prices of the end products remained the same through out the year, thus reducing the profitability," said an industry analyst.

"China has cost advantage over India. Textile companies want government policies to be favourable and in line with those in the neighbouring countries," he added.

One of the major worry among exporters is the reduction in the duty entitlement pass book (DEPB) rates. Through the rate the government reimburses local duties and cess, such as excise duty and mandi cess, paid by exporters.

The government now proposes a new scheme which will be broad-based.

"But the scheme is unclear and the government is yet to announce details," said sources.The exporters expect the performance to improve in October and better in the following months on indication of fall in the crude oil price.

In the export segment, fabrics constitute 49 per cent of the total followed by yarn (26 per cent), made-ups (20 per cent) and fibre (5 per cent).