Textile & garment sector struggling to meet targets
Oct '08
The sector has been hard hit since the last few months. The later part of 2007, saw the rupee appreciating against the dollar by more than 10 percent. To avoid losses in case of further appreciation, the exporters hedged their foreign earnings.
But in just a few months time, the markets witnessed a surge of the rupee against the dollar, due to which the exporters who had hedged their earnings, lost out the gains that could have accrued to them, due to the depreciating rupee. The rising cost of raw materials in the later part of 2007, thanks to rising crude and raw material prices broke their backs further.
Just when things had started normalizing, came the economic turmoil in the markets of US which now has spread to the markets of the European Union. These are the two key markets which account for more than 40 percent of all industry exports.
The Indian economy has become sharply intertwined with the global economy, so repercussions of tremors in global markets are felt like never before in Indian markets. In the first six months of 2008, export growth rate has fallen considerably from those in previous years.
India had to face the ignominy of being ousted from the list of top five apparel exporters to the US by Bangladesh in the first seven months of 2008. Yarn production is dropping and has dropped to its lowest levels since 2004 according to an industry report from Globecot, a global consulting firm for the textile industry.
Due to a drop in exports of apparels, the effects are trickling down to fabric and in turn yarn manufacturing in the country. Production of yarn has fallen by 4.5 percent in July 2008 to 325 million kg compared to June 2008. Fabric production also has fallen to 4,500 million sq.mtrs in July, a fall of 4.5 percent and the steepest decrease since the last four years.
Rising cost of cotton and signs of growing recession in US and EU markets in the first half of 2008 are the reasons attributed by experts to the drop in production of textiles.
Fibre2fashion News Desk - India
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