Bangalore: Silk exports will continue to fall in 2009 to Rs2,000 crore after touching a record Rs3,500 crore in 2007, the Central Silk Board, or CSB, has forecast.
CSB, a government agency that oversees the development of sericulture and the silk industry, has said exports are expected to maintain their decline after falling to Rs2,500 crore in 2008 on the back of a global economic slowdown.
“The year 2009 will spell the death knell for the Indian silk industry,” said T.V. Maruthi, regional chairman of Indian Silk Export Promotion Council (Mumbai), a trade promotion arm of the textile ministry.
Bad times: A display at the Central Silk Board in Bangalore. Silk factory closures would mean job losses in a sector employing 1.4 million. Hemant Mishra / Mint
“Big factories have started reducing number of shifts, ancillary factories are shutting down and big export orders from the US and the UK, our two biggest clients, are getting cancelled,” Maruthi said. “We believe big silk mills will start closing down by February-March.” Factory closures would mean job losses in a sector that currently employs about 1.4 million people, according to CSB data.
“We are preparing to market silk more aggressively in the domestic market as well as find new categories for silk use as big export orders are being cancelled,” said board chairman H. Hanumanthappa.
Ashish Dhir, associate vice-president and textile analyst with management consultancy Technopak Advisors Pvt. Ltd, said the impact of the slowdown will worsen after January, till the end of which shipping of previous export orders will continue.
“After January, the impact will be worse felt because there have hardly been any new orders lately. So volumes will be affected,” said Dhir, adding that while the situation will be negative in the first half of 2009, global textile business is expected to pick up in the second half.
Meanwhile, Maruthi, who is also chairman of Karnataka-based Hanuman Weaving Factory, one of India’s largest silk exporters, said he might be forced to close a couple of factories. The company has 25 factories across Karnataka, West Bengal, Delhi and Gujarat, and employs nearly 2,000 workers.
Silk exporters who were counting on Heimtex, an annual international trade show of home furnishings which takes place this month in Frankfurt, Germany, say that they are hearing that a number of big buyers are likely to stay away this year.
S.K. Bajaj, chairman of Bangalore-based Bajaj Textiles Ltd, said exporters are looking at newer markets.
“We do business on a country-specific basis and are now looking at Greece, Turkey and Yemen for exports as these are relatively less exposed to (Indian) silk exports,” Bajaj said. “We are also focusing on quality control and better servicing of clients as the challenge is to build a fresh customer base in such circumstances.”
The CSB is also looking at diversifying silk products to beat the crisis. It is now developing new products extending traditional usage of silk in saris and furnishings to denims and T-shirts for both domestic and export markets.
Hanumanthappa said CSB is planning to produce and export more of dupion silk, a cheaper variety that has global demand. “To better the quality of dupion produced, we have devised a new dupion reeling machine and have put it for pilot-testing,” he said.