Finance & Economy

Due to war and inflation, the Indian economy is booming, but trade is declining.

Published: May 8, 2023
Author: DIGITAL MEDIA EXECUTIVE

Due to two significant indices that indicate steadfast economic growth, India is viewed as a bright spot in the otherwise bleak global economy. The nation’s manufacturing PMI increased to 57.2, signalling solid manufacturing activity, and the GST collection hit a new high of 1.87 lakh crore. But sentiments in the textile and apparel (T&A) sector in India are deteriorating. Because of these and other causes, the demand for textiles has slowed, according to industry analysts.

Former South Gujarat Chamber of Commerce and Industry (SGCCI) President Ashish Gujarati has said that increased compliance across a number of businesses may be to blame for the record GST revenue. Through stringent requirements to pay tax on their business, the new tax system pushed industry hard. A higher PMI, he claimed, indicates a favourable state. of manufacturing operations in India. However, weak sentiment in the textile industry is being brought on by slower export demand. The domestic market can help the textile value chain, but it has some restrictions. Despite the nation’s high economic growth and prosperity, the textile and apparel industries suffer from consumers’ low purchasing power.

Indian manufacturing and exports are performing well, according to Ravi Sam, chairman of the Southern India Mills Association (SIMA). However, the long-lasting recession that the textile industry is experiencing is a result of the weak demand for clothing and textiles. He also attributed the current weak demand on the more expensive Indian cotton. He clarified that cotton fibre is subject to an import tariff of 11%. Domestic fibre costs compete with the price of Supplies from abroad helped keep domestic prices higher. Indian cotton is sold at prices that are 10–13% more than those found worldwide. As a result, Indian exports lost their competitiveness on the international market. In the past year, Indian exports fell by about 23%.

In addition to industry organisations, the trade community believes that the mismatch between Indian cotton and the global downturn is the cause of the decreased demand. A trader from Ludhiana named Gulshan Kumar Jain stated, “India has 30–40% more capacity in the textile business, which can be satisfied by simply export demand. While more expensive cotton has made Indian exports less competitive. The sector is also concerned about global challenges.

According to another merchant from the Delhi market, some other industries may be operating better in domestic industries, which support PMI and GST collection. However, there are difficulties for the textile industry both at home and abroad. Compared to other industries, the Indian textile industry is highly reliant on export demand.

 

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