The Indian cotton textile industry has been losing its sheen despite support from the government, and lower scale of operation, poor expansion and investment in post-spinning operations, rising labour costs, inconsistent fibre policy and an inefficient supply chain have pushed the industry to a tough situation, according to industry stakeholders.
Lack of a level-playing field to stay competitive on the export front and delay in signing free trade agreements has added to the problem, experts said at a recent discussion on whether Indian cotton textile is losing its competitiveness at the second Agri Conclave in Coimbatore organised by Indian business daily BusinessLine and Multi Commodity Exchange (MCX).
Countries like Vietnam and Bangladesh with least developed countries (LDC) status have an edge as exports from these countries are cheaper by 10 per cent at the threshold level and there is no social compliance, said Prabhu Damodharan, secretary, Indian Texpreneurs Federation (ITF).
Scaling up is essential in post-spinning operations, particularly in weaving, processing, knitting and garment manufacturing, where lack of access to capital and the size of operation is a big disadvantage, observed Susindaran, chief executive officer, Kay Ventures.
Regulations related to zero liquid discharge (ZLD) have pushed the cost of production upward by 20-25 per cent, a report in BusinessLine quoted Suresh Manoharan, secretary, Perundurai SIPCOT Textile Processors’ Association, as saying.
S Dhananjayan, senior auditor and advisor to Tirupur Exporters’ Association, said the knitwear cluster had to conform to various compliances, which resulted in a 10-15 per cent rise in production costs, making the operations unviable.
After the goods and services tax (GST) regime came into force, the sector has started to choke for want of working capital and this is likely to hit the industry’s bottom line by 4-5 per cent, he said.