Textile sector needs $16 bn to meet export goal: study

Textiles and clothing industry needs a capital boost of $15-16 billion to be able to touch the $30-40 billion export mark by 2010.

However, this target seems a far cry from reality as the industry currently has only $5.1 billion (Rs 23,000 crore) investment lined up, according to a survey by KSA Technopak.

Findings of the survey 'Textiles and Clothing Investment Confidence Index (TCICI)' was released on the first day of the two-day KSA- International Textiles and Apparel Congress (KSA-ITAC) being held in the city. This survey assumes significance as this sector earns the biggest foreign revenue in the country.

The textiles sector contributes to over four per cent of the country's gross domestic product and accounts for about 35 per cent of India's foreign exchange earnings.

The survey, based on a sample of more than 120 leading textiles and clothing companies, found that an investment of $ 1.8 billion (Rs 8,000 crore) was lined up for this year and around $3-4 billion was slated to be invested in four-five years.

It is estimated that the companies included in the survey have a combined export turnover of $5 billion (Rs 22,000 crore). They comprise 35 per cent of the textiles and clothing export value from India.

The survey says 89 per cent of the Indian industry is optimistic that the export would go up to $30-40 billion by 2010.

According to the survey, there was a potential for investment in every parts of the textiles sector "" spinning, weaving, knitting, processing and garmenting. Investment potential for spinning was pegged at Rs 15,000 crore. Weaving had an investment potential of Rs 15,000 crore, knitting had Rs 2,500 crore, processing had Rs 25,000 crore and garmenting had Rs 6,500 crore.

More than 80 per cent of the companies that took part in the survey expected a 5-10 per cent reduction in selling price following the abolition of quota from January 1, 2005.

"The challenge that remains is in being able to manage this price drop without reduction in profitability," says the survey. It says that India has to create huge capacities to reach the export target by 2010.

On capacity requirement, the survey says spinning would require 42 million spindles (against the present capacity of 36 million spindles), weaving 37 billion square meter (35 billion square meter), knitting 12 billion square meter (8 billion square meter) and garmenting 3,000 million (1,500 million pieces).