P Koti Rao from Andhra Pradesh, who runs the A.P. Textile Mills Association, while talking to one of the leading newspapers in India, said that 8-9 textile mills have closed down in the past few months, and many are on the verge of shutting down. He continued, adding, “The textile mills are a first-generation industry in Andhra Pradesh. We used to export 30% of the yarn produced. Now, it is not even 5%. Cotton prices are high, electricity charges are up, and there is no support from the Centre or State governments.” 

Sivakumar from Coimbatore, Tamil Nadu, who operates in a foundry, buys textile scraps from woven and non-woven material suppliers from Tamil Nadu’s southern districts. Recently, he received 250 tons of waste from a textile mill that sold its machinery due to business loss. 

Similarly, more than 10 power looms are closing every month in the power-loom cluster of Somanur district in Tamil Nadu.

With similar accounts emerging from various clusters in Tamil Nadu, J. Thulasidharan, the president of the Indian Cotton Federation (ICF), asserts that the prevailing distress in the textile and garment industry, predominantly constituting the MSME sector, resembles the situation experienced in the late 1960s.

What’s the Cause for this Textile Crisis?

An often-repeated reason for this distress is a prolonged period of low demand in both domestic and international markets. 

• Despite retail sales during this year’s festival season holding steady compared to the previous year, the domestic demand remains jaded, both online at TEXchange and offline at DMI.
• On the export front, there was a 0.41% decline in textile shipments during April-October 2023 compared to last year. However, there was a notable 24.29% growth in textile exports in October 2023 compared to October 2022.
• In the case of apparel exports, there was an 8.08% decline in October and a significant 14.58% decrease in the cumulative period of April-October 2023 compared to the corresponding period last year.
• Apparel shipments experienced fluctuations, declining from August 2022, showing improvement in November and December 2022, but resuming negative growth since January.
• Factors contributing to decreased cotton fabric online Indian orders include the geopolitical situation, inflation in international markets, and a substantial inventory burden on retailers.
• Challenges facing the Indian textile and clothing industry include high raw material prices, escalating input costs, quality control orders (QCO), and the import of garments.
• Raw material (fiber) constitutes 60-70% of manufacturing costs, impacting the industry’s competitiveness.
• Cotton, the primary material for the Indian textile sector, has seen a decline in production and yield over the years.
• The imposition of a 10% import duty on cotton led to price fluctuations, affecting farmers and the industry.
• Quality control orders (QCO) on artificial fiber (MMF) are limiting domestic supply, causing an increase in yarn prices.
• Import restrictions on fiber may not be as effective as introducing QCO on garments and fabric.
• Imports of fabric, apparel, and home textiles have been significant, affecting local manufacturers.
• Job losses occur in various segments of the textile industry when fabric is imported, emphasizing the need to support ‘Make in India.’
• Indian garment exporters face price challenges in the international market, particularly against competitors like Bangladesh.
• Post-COVID-19, there was a surge in demand, leading to increased capacity in the textile industry, but overcapacity is now a concern.
• Subsidies cannot be sustained, and the industry needs to enhance competitiveness through metrics like improving cost-efficiency.
• Textile industry clusters like Tirupur are experiencing economic challenges, including rental, retail, and restaurant issues.
• Cotton textile exports have shown signs of revival since July, with outbound shipments crossing pre-COVID levels in October 2023.

The government must implement policies at both central and state levels and take holistic measures to improve competitiveness amongst the textile companies in India. In this regard, it is crucial to assess and recognize the contributions of India’s top 10 textile companies, as they play a significant role in shaping the industry landscape and economic growth.

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