Indian Textile Industry
Global Crisis & it’s Impact
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AGENDA
• Introduction
• Glorious past
• Present scenario
• Slowdown in Growth
• Slowdown in Exports
• Slowdown in Investment
• Declining Profitability
• Employment
• Recommendations 2
INTRODUCTION
• Second largest employer in India after agriculture in today’s scenario.
• The Indian textile industry is estimated at $52 billion.
• In the XI Five Year Plan, textile industry was expected to grow at 16% per annum and attain a size of $115bn by 2012.
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GLORIOUS PAST
• Known as world’s textile hub from the pre-maurya civilisation.
• Transit for the golden silk route.
• British colonial rule help to establish eastern Manchester in Ahmedabad and part of Bombay presidency.
• Post independence boom- due to favoured quota import policy by developed nation.
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PRESENT SCENARIO• Global manufacturing backyard • Supply to all textile and retail majors like Dolce
and Gabbana, Gap, Mark & Spencer, Zara and Harrod’s.
• Global VC major like Blackstone picking up shares in Gokaldas exports and Himatsingasiede.
• Knit ware hub at Ludhiana and Tirupur and dedicated textile SEZ by Adidas in Nellore, AP.
• Indian majors Spentex, GHCL and Welspun making buy-out the iconic brand like Roseby.
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SLOWDOWN IN GROWTH
• The growth rate in the textile industry became 0.8 % in 2008-09 (April-August).
• The growth rate of Wool, Silk & Man-Made Textiles sector became negative (-1.2%) in the first five month in the year (April-Aug).
• The jute textile segment also declined in 2008-09 by 7.4% as compared to the 33% growth in 2007-08.
• Textile products picked up slightly (5.8%) in 2008-09 as compared to 3% in 2007-08. 6
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SLOWDOWN IN EXPORTS
• Indian textile export increased to $19 billion.• In April- May 2008-09, the textile exports were
$3.4 billion, compared to $2.8 billion in April- May 2007-08.
• U. S. Clothing & clothing accessories sales have plunged in September 2008 vis-à-vis August 2008 by 2.3%.
• The share of both Textiles as well as Readymade Garments (RMGs) in total exports of India has been falling since 2006-07. 8
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SLOWDOWN IN INVESTMENT
• In April-July 2008-09, the amount of investment has become one third compared to the level in April-July 2007-08.
• In the year 2007-08, only 470 applications were received for the capital subsidy scheme for Powerloom Units as compared to 863 applications received in 2006-07.
• The amount of FDI in the textile sector has increased slightly to only $37.9m FDI in the textile sector in 2008-09 (April- July). 10
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Declining Profitability
• Profitability of textile sector has been falling since June 2007.
• The profitability declined by 99% in quarter ending June 2008.
• According to CMIE sources the profitability plunges @45% in June 2007 to @99% in June 2008.
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Slowdown & Impact on Employment
• As on March 31st 2007 textile sector provided employment to 35 million people directly.
• Provides indirect employment to another 88 million people in the country.
• To provide employment to an additional 10 million people in the 11th five year plan.
• Current global financial crisis leads to blanket job cut of 5 million specially in artificial textile & weaving sector(Source: Economic Times).
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Recommendations
• Increase duty drawback rates
• Moratorium on Term Loans
• Interest Subvention
• Extension of Sunset Clause
• Custom and Excise Duty on Synthetics
• Technology Up-gradation Fund Scheme
• Exemption from Service Tax15
Recommendations(contd…)
• Excise Duty on Textile Machinery & Spares to be reduced
• Reduction of Custom Duty on Textile Machinery
• Exemption route to be extended to Export Oriented Units (EOUs)
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Recommendations(cont.)
• Fringe Benefit Tax under Sec 115 of the Income Tax Act
• Refund of State Taxes & Duties to Exporters
• Uniform rate of VAT on Industrial Inputs
• Reduction of Excise Duty on Man–Made fibre Products
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THANK YOU
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