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

President Donald Trump; Courtesy: White House

Textiles | On 23rd Jan 2017

US textile industry eager to work with President Trump

The US textile industry is eager to work with President Donald Trump...

Textiles | On 23rd Jan 2017

LyondellBasel expands Texas plant ethylene capacity

US based producer of petrochemicals and speciality chemicals...

Textiles | On 23rd Jan 2017

China’s cotton imports down 39% in 2016

China’s total cotton imports declined by 39.1 per cent to ...tons in...

Interviews View All

Ghanshyam Ghoghari
Kimora Fashion

Bridalwear is not about reds and whites anymore

Frank Gossmann
Rotorcraft AG

‘RT3 motto is: Do not check millimetres, check colours.’

Asim Dalal
Indo Count Retail Ventures

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

Steve Cole
Xerium Technologies

Steve Cole of Xerium Technologies discusses the industry. Xerium is the...

Eric Scholler

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

Giorgio Mantovani
Corman S.p.A

Giorgio Mantovani, MD of Corman, with a presence in both Milano and New...

Judy Frater
Somaiya Kala Vidya

Among the many honours showered on Frater, including Fulbright and Ford...

Yash P. Kotak
Bombay Hemp Company

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

Igor Chapurin

"Now we can see the Russian trend in international fashion. And Russian...

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

January 2017

January 2017

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


Browse Our Archives


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