Indian textile exporters are facing difficult times. They have been facing subdued demand trends in the key importing countries as well as intense competitive pressures from nations such as Bangladesh and Vietnam. In addition, unfavorable currency movements and high raw material prices as well as the recent revision in duty drawback rates have only added to their woes.
The slowdown in apparel segment has mainly been on account of subdued demand conditions in the key textile-consuming regions of the United States and the European Union, which account for a majority of exports from India. This apart, cotton yarn exports have been under pressure on account of a decline in demand from China.
India is the worst-affected nation among cotton yarn suppliers to China. India’s share in China’s cotton yarn imports has fallen to eight per cent in the first quarter of fiscal 2018 vis-à-vis 20 per cent and 25 per cent in the first quarter of fiscal 2017 and the first quarter of fiscal 2016 respectively.
Pressures on textile exporters have become more severe with the strengthening of the rupee against currencies of key competing nations during the current calendar year which has reduced the competitiveness of Indian exporters.