'Textile industry skeptical about export growth this fiscal'

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Namrata Kath Hazarika | 22 Jun, 2012
The textile and clothing industry is skeptical about textile export growth for this fiscal due to the severe ongoing crisis and fall in demand in the Eurozone.

"The Euro zone crisis will have a significant impact on our industry. A third of our total production in textiles and clothing industry is exported and West Europe is our largest market. Demand deceleration there will affect our exports and therefore the industry as a whole," said the Confederation of Indian Textile Industry, Secretary General, D.K.Nair.

The total textile exports touched USD 34 billion in 2011-12, Nair added.

The European economies are severely facing strong demand crunch, debt crisis, and fall in employment rate as of now. As a result, the developing economies dependent on the EU markets are immensely impacted in terms of growth, the industry said.

"The crisis in EU is a matter of concern for us. The target set for apparel exports at USD 18 billion this fiscal (2012-13) seem tough to achieve," said Rakesh Vaid, a leading exporter and Chairman of Usha Fabs Pvt Ltd.

"In our sector, orders start flowing in the month of August and September from the overseas markets. We will get a clear view at that point in time. In fact, we will have to observe the market conditions then," Vaid told SME Times.

Commenting further, he also mentioned, "The indication from the Eurozone is that demand will be flat and growth will be slow this year. However, the weather conditions in the European markets are quite chilling. So, nobody is demanding summer outfits. The demand has fallen tremendously due to this reason."

"And, under such scenario a 25 percent growth in this fiscal is quite challenging for the industry," Vaid added.

Also, A. Saktivel, Chairman, Apparel Exporter Promotion Council (AEPC) said that the sector is facing huge problems due to rising input costs and high interest rates, which is adding fuel to the fire.

Further, CITI has said that most units have problems in managing working capital because of accumulated losses and huge outgo by way of debt repayment, especially in the spinning sector.

"We are awaiting for the implementation of the debt restructuring proposal of CITI which has already been approved by Finance Minister. Implementation of proposal will make a substantial positive impact on our industry," Nair added.

Recently, the government has decided to restructure loans worth Rs 35,000 crore to debt-ridden textiles industry. At the moment the industry has a loan burden of about Rs 1 lakh crore.