Indian textile industry is one of the flourishing sectors of the economy. It accounts for 13% of the industrial output, 4% of the national GDP, and 16.63% of the total export revenues. By 2015, the industry is positively expected by analysts to generate 12 million jobs with an investment of 6 billion USD in textile equipments, and garment manufacturing.
Indian synthetic textile sector is contemporary and has good growth potential to emerge as a major outsourcing hub. It has changed the face of the Indian textile industry not just due to its inherent characteristics, but also because natural fibres alone would not be sufficient enough to meet the needs of the increasing population. On an average, exports of MMF textiles have grown with a CAGR of more than 22%. Apart from maintaining a reputable share in the existing markets, Indian synthetic textiles are also reaching out to new markets. Currently, they are exported to more than 175 countries across the globe. Despite all the apathy of the global recession, this sector remained unaffected with a 12% growth rate, annually. The synthetic sector consolidated Indias market position in the export markets, achieving a positive growth, till recently. Presently, the synthetic textile industry is not at healthy strides.
During 2008-09 Indian synthetic textile exports amounted for `15,767 crores, which increased to `16,861 crores in 2009-10. But of late, exports of the same fell by 1% to reach `3, 852 crores during April-June, 2010-11 from `3,898 crores in the corresponding period of the previous year. The situation worsened with a 20% drop of `3,464 crores during the second quarter of 2010-11 as against the `4,910 crores of the corresponding periods of the preceding year.
Polyester yarn prices have increased by 40%. Prices of polyester staple fibre are also witnessing an increasing trend during the recent past. Increasing prices of polyester staple yarn and inconsistent supply of raw materials are the major factors affecting the growth of the industry.
Exports of synthetic textiles to established markets such as UAE and Saudi Arabia is mainly affected. The major reason behind this decline is the abnormal increase in the price of raw materials like fibre and yarn. Apart from this, the after effects of global turmoil, a sluggish recovery in the EU, and US markets, and China springing up to be a tough competitor for India are also deteriorating the synthetic textile export market. Appreciating rupee value and a radical reduction in the duty draw back rates from 10.5% to 8.5% have also played their part in worsening the situation. Duty drawback plays a crucial rule in maintaining the competitiveness of exports as it neutralizes the incidence of the customs and excise duties on the products.
A significant drop in the imports of textile machinery further indicates that textile tycoons are not interested to invest in the textile industry to enhance the competitiveness of the industry. The export target of 3.7 billion USD fixed by the Government during 2010-11 is likely to be unachieved. Future plans to achieve an export target of 7 billion USD by 2014 may also be affected to a greater extent.
An active Government participation is required to bring the soaring fibre, and the yarn prices under control, and also ensure its uninterrupted availability.