India - Cotton yarn exports projected to rise 11% to 920 million kg in 2012-13 o...
Dated- 10 May , 2012 - India
India`s cotton yarn exports are projected to rise 11% to 920 million kg in the current fiscal on higher output and slowing domestic consumption amid a macro-economic crisis, sources said on Wednesday.
The state-backed Cotton Yarn Advisory Board (CYAB) has forecast a 12% rise in production to 3,500 million kg in 2012-13, the sources told FE.
“Cotton yarn consumption by powerloom and hosiery units is expected to come down, which will result in a decline in overall domestic demand,” one of the sources said, adding that a liquidity crunch in the textiles sector is worsening the situation. Powerloom and hosiery units account for more than half of the total demand for cotton yarn.
“Demand for garments has been lower-than-expected due to the global economic slowdown. This is affecting domestic consumption,” said DK Nair, the secretary-general of the Confederation Of Indian Textile Industry.
The country’s apparel shipment inched up by just 1.5% to $1.28 billion in February— the third worst monthly performance last fiscal— as the crisis in Europe intensified. Apparel exports between April and February, however, rose 19% to $12.14 billion due to an initial pick-up and a 16% depreciation of the rupee against the dollar that made overseas despatches more remunerative.
Apparel exports account for nearly half of the total shipments by the textile and garments industry.
Mills were caught off-guard by a fall in local yarn prices last year after they had bought their main raw material, cotton, at record high prices following a global shortage and large volumes of exports. They could not sell yarn locally at a profit nor could they ship out products due to poor demand as well as export restrictions, resulting in huge losses.
To prop up the cash-strapped textiles sector, commerce and textiles minister Anand Sharma had written to finance minister Pranab Mukherjee in November for the restructuring of loans as well as interest subsidy to the garments and knit-wear sectors grappling with the economic slowdown of their biggest export markets — the US and the EU.
Sharma had also sought a moratorium for two years from July 1, 2011 on the repayment of the principal amounts by the capital-intensive textile units, which account for 90% of the industry’s loans, and a one-year moratorium for other textile segments.
However, since dozens of mills had already been granted loan restructuring during the sub prime crisis in 2008-09, the central bank was not keen to tweak its prudential norms that stipulate any repeated rescheduling of loans be declared non-performing assets.
The textile industry accounts for around 14% of industrial production and more than 10% of the country’s total exports. It is the country’s largest jobs generator after agriculture, employing around 35 million people across various segments.