Textile exports show recovery signs, local demand goes up

Textile exports show recovery signs, local demand goes up
Comment E-mail Print Share
First Published: Tue, Apr 28 2009. 10 06 PM IST

 Revival indicators: A worker at a textile manufacturing facility in Surat. Another pointer to a recovery comes from raw material prices that have strengthened in the last one month. Cotton prices hav
Revival indicators: A worker at a textile manufacturing facility in Surat. Another pointer to a recovery comes from raw material prices that have strengthened in the last one month. Cotton prices hav
Updated: Tue, Apr 28 2009. 10 06 PM IST
New Delhi: India’s textile exports could be showing some signs of recovery as local demand for cotton and synthetic fibre has picked up, an industry lobby group said.
Revival indicators: A worker at a textile manufacturing facility in Surat. Another pointer to a recovery comes from raw material prices that have strengthened in the last one month. Cotton prices have risen by 10%. Santosh Verma / Bloomberg
Apparel exports fell 4-5% to $908 million (Rs4,576.3 crore) in February compared with the same month last year but the sector will “escape negative growth” in the year to 31 March, according to Vijay Mathur, deputy secretary general at the Apparel Export Promotion Council (AEPC).
Exporters are expected to clock about $10 billion in sales in the just-concluded financial year, marginally up from $9.68 billion in the preceding fiscal, Mathur said.
Spinning activity has picked up in manufacturing centres, such as Bhiwandi in Maharashtra and Coimbatore in Tamil Nadu, said J.N. Singh, joint secretary in the textile ministry.
This indicates that companies could be building up inventories on the back of fresh orders. “Orders have picked up in the last 30 days. But the market is still uncertain and it’s yet to be seen whether it can sustain this pace,” said Rakesh Mehra, director at Banswara Syntex Ltd. The Bombay Stock Exchange-listed company exported Rs300 crore of yarn and fabric in 2007-08, but saw a 70% dip in business between September and February.
The country’s exporters are now focusing more on newer markets such as Brazil, South Africa, Japan, Russia and Australia, shifting from their traditional bases in the US and Europe, which currently constitutes 75% of India’s apparel exports.
“Dependency on the Western market has given us a jolt. To survive, there is no option but find buyers elsewhere,” Mathur said. Last month, AEPC took a business delegation to South Africa and plans to repeat the exercise in Australia and Japan later this year.
“We’ve been too focused on the western hemisphere. We were complacent about the smaller markets, such as Brazil and South Africa,” said Hari Kapoor, managing director of New Delhi-based Allied Exports Industries, which ships out three million pieces of garments every year, including to US retail houses such as Jones Apparel Group Inc. and Charming Shoppes Inc.
Currently, India has a 3.5% share in Japanese textile imports, the world’s second largest retail economy. In South Africa, Indian exports account for one-third of South Africa’s $1,100 million market. In Brazil, its share is a mere $130 million out of $2.5 billion, according to AEPC.
In another indication of recovery, raw material prices have strengthened in the last one month. Viscose staple fibre prices have shot up from $1.4 a kg in January to $1.8 per kg this month. Cotton prices have risen by 10% to Rs22,700 per candy. A candy is equal to 356kg.
Average cotton prices have, however, fallen 25% since last year. “Cotton prices have softened with CCI (Cotton Corp. of India Ltd) offering discounts in the last six weeks,” said Mansi Sajeja, an analyst at rating agency Icra Ltd.
Some companies said the real growth in textiles will be pushed by retail sales. “There is a correction in the market, but fundamentally, price and demand movement has to come from retail and at present there is no indication of that,” said Vijay Kaul, chief marketing officer at Grasim Industries Ltd, which controls 28% of the global viscose staple fibre market.
Comment E-mail Print Share
First Published: Tue, Apr 28 2009. 10 06 PM IST