THE IMPACT OF REDUCED EXPORT DEMAND ON INDIA'S HOME TEXTILE INDUSTRY

 

The Indian home textile industry is currently facing significant challenges due to a sharp decline in export demand. The repercussions of this downturn are being felt in production centers across the country. From Panipat to Coimbatore and Tiruppur, home furnishing hubs are witnessing a suspension of production operations. This blog post delves into the factors contributing to this situation and explores the consequences for the industry.

Decreased Export Demand and Production Cuts

With reduced demand for home textiles in international markets, Indian production centers have been severely affected. The repercussions of this decline are evident in Panipat, where weekly production cuts have been implemented. Furthermore, other key home furnishing hubs like Coimbatore and Tiruppur have also been compelled to halt their production activities. In the past week alone, approximately 400 open-end spinning and weaving mills have ceased operations, exacerbating the industry's challenges.

The Plight of Open-End Spinners

According to M Jayabal, president of the Coimbatore-based Recycled Textile Federation, open-end spinners are grappling with losses resulting from the combination of high raw material costs and low prices of finished products. The cost of their basic raw material, cotton comber, currently stands at around ₹110 per kg. Consequently, the production costs escalate to approximately ₹160-165 per kg. Regrettably, the mills are unable to recoup more than ₹150-155 per kg for their products. Despite initially adopting partial production cuts to manage prices, the industry was eventually forced to completely suspend production from the first week of July.

Industry Bodies Cease Yarn and Fabric Production

Recognizing the dire circumstances, various industry bodies, including the Recycled Textile Federation (RTF) and the Open-end Spinning Mills' Association (OSMA), have made the difficult decision to cease yarn and fabric production for home furnishing products. A press release by the RTF reveals that waste cotton prices have been consistently rising since 2022. Previously, cotton comber prices accounted for 40-50% of the virgin cotton price, but they have now escalated to 50-75% of the pure cotton price. Unfortunately, the industry cannot raise the prices of their finished products, such as grey cloth and home textile goods, in a similar manner.

Adding to the industry's woes, higher power charges are placing additional strain on production centers. The Tamil Nadu Power Board has introduced the concept of peak hours for LT/CT electricity consumers, which entails charging 20% higher rates during these periods. This development further exacerbates the financial burden faced by home textile manufacturers.

Conclusion

The reduced export demand for home textiles has had a severe impact on Indian production centers, leading to the suspension of operations in key hubs like Panipat, Coimbatore, and Tiruppur. Open-end spinners, in particular, are facing significant losses due to high raw material costs and low prices of finished products. Industry bodies have been compelled to halt yarn and fabric production, unable to cope with rising cotton comber prices. Moreover, the introduction of higher power charges has compounded the challenges faced by the industry. As the situation continues, it is crucial for stakeholders to find innovative solutions to revitalize the Indian home textile sector and mitigate the adverse effects of reduced export demand.

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