• UGI USER
  • Dec 08, 2023
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TEXTILE INDUSTRY CRISIS

Why In the News?

  • Textile and garment industry, mainly constituting MSMEs, faces a crisis akin to the late 1960s, according to Indian Cotton Federation (ICF) President J. Thulasidharan.
  • Reports indicate shutdowns, machinery disposals, and reduced working hours across the textile value chain.
Source: WTO

Factors Impacting Industry:

  • Low demand in both domestic and export markets contributes to the prolonged crisis.
  • Shipment of textiles declined 0.41% (April-October 2023) YoY, while apparel exports saw an 8.08% decline in October.
  • Geo-political situation, inflation, and excessive retailer inventory dampen orders.

Raw Material Challenges:

  • Cotton, constituting 60-70% of manufacturing cost, faces fluctuating prices and reduced competitiveness.
  • Cotton production and yield in India show a downward trend, impacting the largely cotton-based textile sector.
  • Imposition of 10% import duty in 2021 led to fluctuating cotton prices, affecting farmers and the industry.

Quality Control Orders (QCO) Impact:

  • Quality Control Orders, especially for Man-Made Fibre (MMF), limit domestic supply, exacerbating industry challenges.
  • Escalating input costs, stringent QCO, and import of garments contribute to the multifaceted issues hindering industry growth.
  • Stakeholders emphasize the need for consistent and long-term government decisions to benefit both farmers and the consumer industry.

About Textile Production in India:

  • India is the 5th largest producer of technical textiles in the whole world with a market size of nearly $22 Bn.
  • Cotton, a crucial commercial crop in India, constitutes approximately 25% of global production.
  • Cotton is referred to as “White-Gold” due to its economic significance.

The textile industry’s current plight demands comprehensive solutions addressing demand concerns, raw material stability, and policy measures supporting long-term growth.