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'US crisis will adversely impact textile industry' – Mr Vikram Rao

02 Oct '08
3 min read

The sub prime crisis in the US is leaving in its wake lots of instability in the global markets. Since US is the highest importer of textiles and apparels worldwide, it is impacting the sector on a greater scale. The markets of the EU are also likely to be affected by the crisis. The slow down in the last few months is for real.

This has also invariably affected shipments from the sector from India too. According to latest industry estimates, textile and garment exports are expected to touch US $24.6 billion in 2008-09, up 20% from the previous year's $20.5 billion but short by a wide margin against the government targeted figures of $31.17 billion in this fiscal year.

In order to have a better understanding of the crisis, fibre2fashion spoke to Mr Vikram Rao, Business Director, Textiles & Apparels, Aditya Birla Group, India to understand his views on the crisis in the US affecting the Indian textile and garment industry.

The Aditya Birla group is a US $28 billion multinational conglomerate with operations across the globe and has considerable interests in textiles and branded garments.

The textiles business has operations across the whole value chain. In the ready to wear category it functions under the name of Madura Garments which in turn has well known brands in its fold like Louis Philippe, Allen Solly, Van Heusen and Peter England.

Fibre2fashion: How do you foresee the effect of financial turmoil in US affecting Indian textile sector?

Mr Rao: The financial turmoil will have an adverse impact on the Indian textile sector. The real impact would be felt if the overall economic slow down in the US and European economies persist over a long duration, which would impact the consumer consumption in these economies. This would result not only in the reduction in demand for the Indian Textile Sector but also result in pricing pressures.

Fibre2fashion: Is there a significant change in demand from US customers in recent past due to the crisis in financial market?

Mr Rao: There has been a slowdown in the demand from US customers. The negative impact will be felt more if the slowdown persists for a long duration of time.

Fibre2fashion: Do you think that focusing on European countries rather than US would be beneficial for Indian companies?

Mr Rao: The US and Europe are two distinct markets. US is the biggest market in terms of volumes whereas Europe offers better pricing but demands higher quality products. But Europe cannot match the volumes, which US offers. Hence, Indian companies cannot afford to ignore either of the markets. In order to fill up production capacities, sizable presence in the US is a must.

Fibre2fashion: What is your view on world textile market in current scenario?

Mr Rao: The textile market is not immune to the business cycles across the globe. Globally there is an economic slow down and this has a negative impact on world textile market as the consumption slows down. The slow down has resulted in pricing pressures across the industry. The impact of this is also felt on textile manufacturing, which has started to shift from Europe to emerging economies like Asia.

Fibre2fashion News Desk - India

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