Textile and garment exports by India may reach $31 billion to $32 billion in 2011-12, falling short of the target by a tad despite a sharp depreciation of the rupee, Confederation of Indian Textile Industry secretary general DK Nair said. The country shipped out textile products and garments worth $26.8 billion in the 2010-11 fiscal.
The countrys apparel shipment inched up by just 1.5% to 1.28 billion in February, the third worst monthly performance this fiscal, as the crisis in Europe intensified. Apparel exports between April and February, however, rose 19% in dollar terms to $12.14 billion due to an initial pick-up and a 16% depreciation of the rupee against the dollar that made overseas despatches more remunerative. Apparel exports account for nearly half of the total shipments by the textile and garments industry.
The government expected the exports to rise in 2011-12 as demand seemed to have returned after the global financial turmoil in 2008, but the debt crisis in Europe erupted, jeopardising shipment prospects. Adding to the worry, textile mills were caught off-guard by a fall in local yarn prices after they had bought their main raw material, cotton, at high prices. They could not sell yarn locally at a profit nor could they ship out products due to poor demand as well as export restrictions, resulting in huge losses.
The US market is slightly picking up, but concerns still linger about the macro-economic crisis in Europe, our biggest market. Although exporters are trying to boost sales to new markets to mitigate risk, there has not been any significant outcome of that yet, said Nair.
EU and the US, the worst affected nations in the current debt crisis, together account for around 65% of Indias textile exports.
The textile industry accounts for around 14% of industrial production and more than 10% of the countrys total exports. It is the largest jobs generator after agriculture, employing around 35 million people across various segments.
To prop up the cash-strapped textiles sector, commerce and textiles minister Anand Sharma had written to finance minister Pranab Mukherjee in November for the restructuring of loans as well as interest subsidy to the garments and knit-wear sectors grappling with the economic slowdown of their biggest export markets that forced a sudden plunge of product prices after two successive years of relentless rise in raw material costs.
Sharma had also sought a moratorium for two years from July 1 on the repayment of the principal amounts by the capital-intensive textile units, which account for 90% of the industrys loans, and a one-year moratorium for other textile segments. However, the Reserve Bank of India has rejected the loan restructuring proposal.