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The Textile Magazine
JUly 2012
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115
position in global textile industry, owing to its ad-
vantages of adequate availability of raw materials,
relatively lower conversion costs, skilled man-
power and favourable demographics. Cotton and
polyester accounted for around 92 per cent of the
total fibre requirements of Indian textile mills.
As per government estimates, cotton and man-
made fibre consumption in India is in the ratio of
59:41 as against 40:60 globally. The lower per cap-
ita fibre consumption in India of around five kg as
against the global average of 11 kg indicated huge
potential for expansion of fibre consumption. Other
major demand drivers included rising disposable
income and working population, emerging non-
apparel applications of fibre and industry-friendly
government policies.
In FY 2011-12, the textile industry was impacted
due to volatile cotton markets. Within a span of
around five-six months, the international and do-
mestic cotton prices saw historic peak and subse-
quently a steep fall.
The uptrend was primarily due to shortage of
cotton availability across the world and certain
government policies on cotton and cotton yarn ex-
ports, which were not congenial for textile industry
growth. Consequently, the industry resorted to
panic buying and stocked cotton.
But, with the beginning of declining trend in cot-
ton prices, the industry faced problems in sourcing
of cotton, impacting the downstream demand as
well. End-users moved into strict wait-and-watch
mode, and the textile industry faced huge pile-up
of unused cotton and cotton yarn inventory, lead-
ing to severe stock losses. Man-made fibres, especially
polyester fibre and yarn, fared relatively better as volatility
in prices of polyester was much lower as compared to cot-
ton. Major textile production centres in Andhra Pradesh,
Tamil Nadu and some northern States faced severe power
shortages, adversely affecting the output and profitability
of mills. Labour shortage was also prominent during the
year.
Government restrictions on raw cotton and cotton
yarn exports were witnessed along with some proactive
measures to assist the domestic and export community
against the backdrop of weakened demand and continu-
ous economic uncertainties from the West. The Technol-
ogy Upgradation Fund Scheme (TUFS) was restructured
and higher allocations were provided. The high potential
growth segment, technical textiles, was included within its
ambit. The Textile Ministry proposed to make TUFS a part
of the 12th Plan beginning from April 2012.
The Government also announced Rs. 900-crore incen-
tives for exporters in October 2011. The Focus Product
Scheme was extended to include polyester textured yarn
(PTY), fully drawn yarn (FDY) and polyester textile grade
chips.
A Special Focus Market scheme was introduced, which
provided additional one per cent duty credit for exports to
specific countries. The Government scrapped the DEPB
scheme and introduced the revised duty drawback scheme
with effect from October 1, 2011. Further, the Government
approved 21 new integrated textile parks in nine States
at a project cost of Rs. 2,100 crores over a period of 36
months. These parks are expected to leverage an invest-
ment of over Rs. 9,000 crores and generate over four lakh
jobs.
RIL’s performance
Reliance Industries Ltd. (RIL) continued to hold top
rankings in polyester and feedstock markets, constantly
reaping the benefits of backward integration. RIL’s consol-
idated polyester capacity stood at 2.4 mmt. According to
PCI, RIL held the first rank in polyester fibre and filament
capacity, fifth rank in PX and 8th in PTA and MEG.
RIL catered to 38 per cent of the domestic market and
exported to over 100 destinations.
During FY 2011-12, domestic polyester demand grew
moderately at two per cent over FY 2010-11. The momen-
tum was led by the 17 per cent growth in PET followed by
fiber news