Home / Knowledge / News / Textiles / Defaults in textile sector on an ascending curve
Defaults in textile sector on an ascending curve
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

Union textiles minister Smriti Irani addressing at the Texprocil Annual Export Awards. Courtesy: PIB

Textiles | On 22nd Oct 2016

Govt to extend special package to home textiles segment

The Central government is likely to extend the recently approved Rs...

Reebok Liquid Speed Grey. Courtesy: Business Wire

Apparel/Garments | On 22nd Oct 2016

Reebok’s Liquid Factory brings sneaker creation to US

Reebok, a pioneer in the sporting goods industry, has brought sneaker ...

Courtesy: GHCL

Textiles | On 22nd Oct 2016

GHCL to invest Rs 67.25 crore in textile division

Chemicals and textiles firm GHCL will invest Rs 67.25 crore in its...

Interviews View All

Amardeep Singh
Orient Craft

'In export markets, the trend in terms of embroidery, is towards matte...

Ajay Ghariwala
Luthra Group

We are ready to adopt or follow every opportunity

Asim Dalal
Indo Count Retail Ventures

Today, there is no other emerging market as India, "we make in India and...

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Paolo Ocleppo
Sandvik Hyperion

Paolo Ocleppo, Rotary Cutting Segment manager, Sandvik Hyperion discusses...

Ashok Desai
Bombay Textile Research Association

Bombay Textile Research Association (BTRA) is a leading name in textile...

Yash P. Kotak
Bombay Hemp Company

One of the directors of Bombay Hemp Company, Yash P. Kotak, speaks to...

Pranav Mishra

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

Silvia Venturini Fendi
Fendi s.r.l

"Yes, my confidence and positive attitude are my strengths and should be...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


Letter To Editor

(Max. 8000 char.)

Search Companies

October 2016

October 2016

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


Browse Our Archives


Advanced Search