Home / Knowledge / News / Textiles / Defaults in textile sector on an ascending curve
Defaults in textile sector on an ascending curve
13
Feb '09
The textile and garment industry is a very capital intensive industry. Its liquidity requirements, whether fixed or working are very huge. Investment in land and machinery is substantial and after that the company needs to invest in raw materials like cotton, most of which is bought in advance during the beginning of the season, to fulfill requirements of the full year.

This has led to a huge exposure from banks and financial institutions in to the sector. The textile sector accounts for as much as 22 percent of loans extended by banks to all sectors. But since the beginning of the slowdown from September 2008, defaults in prepayments of loans have begun to shoot up from within the textile industry.

The spinning sector which has the largest exposure, from amongst the industry, has been facing problems since the last two years. Last year, there were severe problems in electricity supply, leading to cutback in productions and the industry was also faced with problems with regards to supply of gas and its pricing adopted by the then government.

But now the hens have come home to roost. The textile units have been trying to avoid a bankruptcy in the last few years. But with the wheels of motion, i.e, production and sales cycles being affected due to the recessionary trends, the textile units are facing severe liquidity problems leading to more and more defaults tumbling out of closets.

The government has assured of announcing a textile package to revive and stabilize the industry, which if not forthcoming early, could lead to disastrous consequences in the textile sector, leading to the same consequences in the banking and financial sector and has the potential to disrupt the economic cycle of the country.

Fibre2fashion News Desk - India

Must ReadView All

Courtesy: H&M

Apparel/Garments | On 30th Mar 2017

H&M group's sales increase 7% in 3 months to Feb '17

The H&M group's sales including VAT amounted to SEK 54,369 million...

Textiles | On 30th Mar 2017

Vietnam’s textile & garment exports earn $4bn in Jan-Feb

Vietnam earned $4 billion from textile and garment exports in the...

Textiles | On 30th Mar 2017

India Inc should work for July 1 GST roll out: Fin sec

The Goods and Services Tax (GST) will take India into a very exciting ...

Interviews View All

Priyanka
Studio Priyanka Rajiv

‘To reinvent the age-old tradition of embroidery to suit demographics and...

Angelina Francesca Cheang
MY ANJE

'Consumers in the age-group 21 to 38 are driving the activewear trend'

Smith Vaghasia
Sanado India

Online remains the best destination for shopping

Silke Brand-Kirsch
Schlegel und Partner

Silke Brand-Kirsch, executive partner of Schlegel und Partner, a leading...

Eric Scholler
Groz-Beckert

The Indian market has huge potential in technical textiles, and by far,...

Kevin Nelson
TissueGen

Kevin Nelson, Chief Scientific Officer, TissueGen discusses the growing...

Pranav Mishra
Huemn

Designers Pranav Mishra and Shyma Shetty’s Huemn is known for its...

Jay Ramrakhiani
Occasions Elegance Wear

It is believed that by early 19th century, Varanasi weavers had moved away ...

Ritu Kumar
Label Ritu Kumar

‘Classics will return’ "There are a lot of people wearing western clothes ...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
March 2017

March 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


eNEWS
Insights
Subscribe today and get the latest News update in your mail box.
Advanced Search