The textile sector, which witnessed problems on the supply and price fronts during the last couple of months, is expected to stabilise soon. “I am optimistic about the yarn market,” chairman of the Southern India Mills' Association J. Thulasidharan told The Hindu here on Monday.
According to him, October to March is a good period for the Indian textile and clothing sector every year as the festival season pushes up demand in the domestic market and exporters start production and shipping for the overseas market. Several textile mills here had stopped using generators now as the power cost had gone up substantially when generators were used. They were limiting production to grid power availability. Internationally, there was a power shortage in some of the competing countries such as Bangladesh. The Chinese textile mills were facing labour shortage and hence their yarn production had come down. No big spinning capacity had come up in any country. In such a scenario, with improvement in demand “yarn prices are likely to start improving from July and stabilise after that.”
An industry source here added that the United States demand was expected to be four to five per cent higher this year as against the last two years and this would mean higher export opportunities for the garment and made-up sectors here.
Since the announcements by the Union Government on registering cotton yarn exports, withdrawal of Duty Entitlement Passbook Scheme benefit and Duty Drawback for cotton yarn exports, prices of weaving yarn had declined significantly. At this price, mills would incur losses. Yarn rates would have to stabilise soon, he said.
The mills had postponed modernisation and capital investment during the last two year. They have to start repaying the loans as the moratorium period ends. “Long term sustainability and survival of the mills is possible only if they can make eight to 10 per cent net profit,” he said.
The textile sector should improve the supply chain and the Government should go in for accurate assessment of the production and carry forward stock. This would enable the Government to calibrate cotton exports and thus help the domestic industry, he added.
Keywords: Forecast on textile sector