The textiles and clothing industry in India is facing significant challenges as the huge incentives offered by several state governments for new investments have eroded the competitiveness of existing capacity. This has rendered many textile units unviable, exacerbating the industry’s struggle with excess capacity.
KV Srinivasan, the newly elected President of the International Textile Manufacturers Federation, expressed concern over the industry’s predicament. Despite being the second largest manufacturer of raw materials globally, India has failed to gain a competitive advantage. Meanwhile, countries like Bangladesh and Vietnam, without a raw material base, have achieved exponential growth rates in textile exports.
To revive the industry, Srinivasan called for a moratorium on loan payments, conversion of short-term loans into long-term ones, and an extension of additional working capital. These financial relief measures are urgently required to prevent textile units from becoming non-performing assets and protect jobs that are at risk of being lost due to closures.
Srinivasan emphasized the need for both state and central governments to introduce appropriate policy measures that address issues related to raw materials, power, labour, and new investments. He also highlighted the importance of adopting a holistic approach to enhance global competitiveness and leverage the China+1 policy.
Globally, the textile industry has been grappling with a prolonged slowdown since the second half of 2022. This has been primarily driven by weakening demand from major export markets like the US and the EU. High-cost inventories accumulated during the pandemic and supply chain disruptions, including the Ukraine-Russia war, have further restrained demand.
In India, the textiles and clothing industry has been severely affected by challenges in sourcing raw materials, both cotton and man-made fibres and the steep increase in power costs across textile manufacturing states. Urgent policy measures are needed to ensure a smooth and competitive supply of raw materials by addressing issues related to import duty, quality control orders, and price disparities.
Srinivasan suggested that the Indian government enforce Quality Control Orders from finished goods, similar to technical textiles, rather than imposing restrictions on raw materials. This would alleviate the adverse impact on the man-made fibre value chain.
These urgent measures are crucial for the revival of the Indian textiles and clothing industry and its ability to compete in the global market. Failure to act swiftly could result in further stagnation and loss of jobs, hampering the industry’s recovery prospects.
