Indian Textile Industry Witnessing Unparalleled Financial Crisis
The Indian textiles and garment industry is witnessing an unparalleled financial crisis due to various reasons and which have disrupted exports of yarns, fabrics and garments to the main markets of the US and EU.
The reasons include the prolonged Russian-Ukraine war, higher inflation, slow-down in global economy, 11 percent import duty levied on cotton and disruption in the supply of manmade fibres due to certain practical difficulties in implementing Quality Control Orders.
The cumulative impact of all these factors have seen an 18 percent drop in total textile and garment exports, 50 percent decrease in yarn exports and 23 percent decline in cotton textiles, when compared to the previous year.
According to South India Mills Association (SIMA), the country currently has over 30 percent excess capacity particularly in the capital-intensive sectors like spinning and weaving.
“75 percent of the units in the country are MSME’s and the textiles and garment industry that normally work at 3-6 percent profit margin is currently incurring 5-10 percent loss and the industry urgently needs interim financial relief to prevent the units becoming NPA’s,” Ravi Sam, Chairman at SIMA said at a press conference.
The SIMA Chairman also sought relief measures from the Government of Tamil Nadu by way of certain relief measures in the electricity tariff.
SIMA Chairman said textile units cannot survive without any reliefs from both, the Central and State Governments.
He added that the banks have given red alerts to most of the textile units across the country owing to the unforeseen financial stress, while the repayment for the short-term loans extended during the COVID period has significantly increased the financial burden of the textile industry.
“A majority of the SME spinning mills in Tamil Nadu have announced stoppage of production and yarn sales from July 15, 2023,” he informed.
The Indian textiles and clothing industry provides jobs to over 110 million people and is the second largest employment provider next to agriculture, fetching US $44 billion in exports and over Rs 25,000 crores in GST collections.
