Opinion: The Indian Textile Industry Needs Value Addition More than Ever

The Indian textiles sector needs to refocus and concentrate on value addition.

India’s textile industry is now in distress due to sluggishness in yarn uptake by the upstream sectors. The ongoing trade war between the United States and China is having its own effect on the manufacturing and textile sectors in India. Cotton availability, manufacturing costs and slowing of yarn export are some of the factors negatively affecting the industry.

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While cotton prices are showing a declining trend since June, the spinning industry is not enthused about buying cotton at the present time. For example, 30-mm cotton that was priced at Indian Rupees (INR) 47,000 to 48,000 per candy (about 356 Kgs) a few months back, is today priced around 44,000 INR per candy – a fact that should interest mills to buy and stock. Lack of cotton yarn buying by the upstream sector in India has put enormous pressure on the spinning industry and allied sectors such as textile machinery.

“Yarn demand is not there,” stated Mr. S. K. Nanjappan, managing director of Kanaka Lakshmi Mills, Pvt. Ltd., who has been in the textile field for 50 years. A telephone conversation with him revealed many valuable points worth considering.

The Indian domestic market is saturated, and hence, value-addition focusing on technical products and export market is needed. He described how his company started moving away from fashion and commodity textiles in 2000. Today, his weaving mill manufactures 400,000 square meters of woven cloth per month that goes into making base cloth for abrasives, showcasing the positive aspect of diversification. He is still exploring various options to take his company into the technical textiles industry.

“Cotton yarns are selling at a much lower price than last year, thus squeezing margins and forcing production shutdown,” stated Mr. Velmurugan, general manager of a 70,000-ring spindle mill in Aruppukottai, South India.

China factored heavily in his views on the slowdown of the Indian textile sector. He agreed that value-addition is the need of the hour and stated that the Indian spinning sector is a world leader. However, upstream sectors such as processing and technical textiles sectors need enhancement. He insisted that Indian government needs to support export by boosting incentives to capture high-end markets.

The cotton yarn situation has forced one day per week mandatory factory closures in some regions in India, idling about 30% of the total spinning capacity in India.

Since my lecture at a meeting in Coimbatore organized by the South India section of The Textile Institute in 1999, I have been championing the development of the value-added sector by careful diversification across the fiber-to-fashion supply chain.

The Indian textile and manufacturing industry needs an uptick. “The Indian industry, not only the textile sector, is in a wait and watch mood,” stated Mr. Nanjappan.