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The Textile Magazine
August 2012
Cotton yarn exports projected
to rise by 11% this year
industry news
India’s cotton yarn exports are projected to rise 11
per cent to 920 million kg. in the current financial year.
The Cotton Yarn Advisory Board (CYAB) has report-
edly forecast a 12 per cent rise in cotton yarn produc-
tion to 3,500 million kg. On the other hand, consump-
tion by powerloom and hosiery units is expected to
come down, resulting in a decline in overall domestic
demand. Further, the liquidity crunch in the textile sec-
tor is said to be worsening the situation. In fact, more
than half of the total demand for cotton yarn is
accounted for by powerloom and hosiery units.
Reports add that demand for garments has
been lower than expected due to the global
economic slowdown. This is said to be affecting
domestic consumption. Data are quoted to show
that the country’s apparel shipments inched up
by just 1.5 per cent to $1.28 billion in February,
the third worst monthly performance in 2011-
12, as the crisis in Europe intensified. Apparel
exports between April 2011 and February 2012,
however, rose 19 per cent to $12.14 billion, due
to an initial pick-up and a 16 per cent deprecia-
tion of the rupee against the dollar that made
overseas dispatches more remunerative. Ap-
parel exports account for nearly half of the total
shipments by the textile and garment industry.
It is stated that mills were caught off guard by
a fall in local yarn prices last year after they had
bought their main raw material, cotton at record high
prices following a global shortage and large volumes
of exports. They could not sell yarn locally at a profit,
nor could they ship out products due to poor demand as
well as export restrictions, resulting in huge losses.
To prop up the cash-starved textiles sector, the Com-
merce and Textile Minister had taken up the matter
with the Prime Minister and the Finance Minister in
November for restructuring of loans as well as inter-
est subsidy to the garment and knitwear sectors which
were grappling with economic slowdowns of their big-
gest export markets – the US and the EU. A morato-
rium for two years from July 2011 on repayment of the
principal amounts by the capital-intensive textile units,
which account for 10 per cent of the industry’s loans,
and a one-year moratorium for other textile segments
were sought.
However, since dozens of mills had already been
granted loan restructuring during the sub-prime crisis
in 2008-09 the Reserve Bank was not keen to tweak
the prudential norms that stipulate any repeated re-
structuring of loans be declared non-performing assets.
It is stated that the textile industry accounts for around
14 per cent of industrial production and more than 10
per cent of the country’s total exports. It is the coun-
try’s largest jobs generator after agriculture, employ-
ing around 55 million people across various segments.
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