Demand shocks are expected to hurt India's textile exports over the next few quarters, and the government should consider announcing a comprehensive financial support package along the lines announced in Germany and the US, international consultant KPMG has said in a recent report. Production of yarn, fabric and apparel is expected to decrease.

For medium to long term, KPMG suggests that government to "provide an adhoc reimbursement/ concession of 5-10 per cent against the recently approved Remission of Duties or Taxes on Export Product (RoDTEP) scheme to compensate for the hitherto unreimbursed levies and taxes to the exporters."

From a manufacturing perspective, employment would be impacted owing to limited demand in both domestic and international market, and the textile and apparel sector production is expected to decline by 10-12 per cent in the April-June quarter, the report titled 'Potential impact of Covid-19 on the Indian economy' said.

Cotton fibre prices are expected to take a hit, according to the report. While prices of imported man-made fibre (MMF) used for high value products is expected to rise by 25-30 per cent over the next two quarters (April to September 2020).

Yarn accounts for 29 per cent of India's textile trade, as per ITC Trademap database. With a decline in demand in both global and domestic market, the yarn production is expected to contract by 12-15 per cent over the next two quarters.

Fabric production is expected to decrease owing to decline in exports and stagnation in apparel/home textiles production. Apparel production is expected to contract by 18-20 per cent, as per industry sources, owing to decline in global demand. Home textiles industry has had limited impact of the Covid-19 induced global downfall, the report states.

Fibre2Fashion News Desk (RKS)

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