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Desk | January 2020

Plain Vanilla will not work in 2020

India’s textile sector is under stress with 2019 turning out to be a challenging year. The country’s exports of textile and apparel declined by 4.3 per cent to $22 billion in the first seven months of FY2020 (April-November). While cotton yarn was a major casualty with 37 per cent decline (whereby exports to China alone halved), growth of apparel exports continued to be anemic. In November alone, exports of cotton yarn, made-up textile articles and handloom products declined 3.65 per cent on a YoY basis, while those of readymade garments fell 6.5 per cent.

Among the major challenges facing the Indian textiles industry are lack of global competitiveness (especially in the downstream processing sector), fiscal policy anomalies and infrastructural issues. India has some world class companies in cotton textiles; however the same could not be said of man-made fibre (MMF) textiles. India’s exports of MMF textiles have been stagnant at $6 billion. Apparel manufacturing had been the engine of growth for textile industry in other Asian countries and India continues to lag behind peers such as China and now Vietnam and Bangladesh.

Exports of Indian MMF textiles in 2018-19 were $6,138.57 million compared to $6,024.08 million during 2017-18 – a growth of nearly 2 per cent. However, during the last three quarters of 2019-20, export performance has been discouraging and is a serious concern for the Indian MMF textile segment. As per the data released by the Directorate General of Commercial Intelligence and Statistics (DGCI&S), exports during April-October 2019-20 in value terms were $3,427.63 million against $3,611.46 million, witnessing a decline of 5.09 per cent as compared to the corresponding period of the previous year.

Slump in the domestic textile industry has also impacted the textile machinery segment. The production of the textile engineering industry (TEI) recorded a decrease of 1 per cent viz Rs 6,865 crore in 2018-19 as against Rs 6,900 crore achieved during 2017-18. The decline in production of spinning machinery was responsible for this decline. Distress in the industry and accumulation of NPAs (non-performing assets) got accentuated in 2019. The industry expressed reluctance in embarking on any major expansion projects which caused a slump in the textile machinery market, affecting both the local as well as international OEMs (original equipment manufacturers).

The government is presently in process of framing the new Textiles Policy 2020 with a special focus on manufacturing of apparel and garment, technical textiles, man-made fibre products and exports. Efforts should be to resuscitate India’s moribund textile and clothing (T&C) exports where the country has the potential to gradually double its share in global T&C industry from the current 5 per cent. With WTO lowering its forecast for growth of merchandise exports in 2020 from 3 per cent to 2.7 per cent, an out-of-the-box approach is needed instead of plain vanilla, to steer the way ahead.

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