Yuan devaluation a double whammy for textile industry in MP
China's move to devalue the Yuan has made an already bad situation worse for the textile industry in Madhya Pradesh, say experts.indore Updated: Aug 13, 2015 21:33 IST
China's move to devalue the Yuan has made an already bad situation worse for the textile industry in Madhya Pradesh, say experts.
China imports synthetic yarn from India to convert it into fabric and garment.
Madhya Pradesh exports yarn worth Rs 2,500 crore annually of which China accounts for about 60%.
"Yarn exports (from India) to China have fallen by about 50% in recent months as the neighbouring country has cut back production due to falling demand in global markets," MP Textile Mills' Association secretary M C Rawat said.
"The fall in Yuan will not have any impact on yarn exports but will affect the readymade garments exports," he said.
The textile association has approached the union finance ministry urging it to take remedial measures.
"The problem is that Indian textile products command higher duties in major international markets. This coupled with higher input costs is making the local industry uncompetitive," Rawat said.
Experts have predicted a negative outlook for the synthetic textile sector for 2015-16.
However, apart from China, the sector could also see an impact due to other factors.
According to a recent report by India Ratings and Research, the industry also estimates price of polyester fibres to decline due to oversupply of cotton yarn.
"The situation has now aggravated to such an extent that Indian synthetic textile units have cut production by 30%," he said.
Exporters have tried to increase the share in other markets and there has been a slight rise in yarn export to Sri Lanka, Bangladesh and Vietnam in recent months.
The textile association has urged the union government to make polyster fibres available on par with international price and reintroduce the 3% interest subsidy. The association has also urged the Centre to allocate funds to clear all pending cases and the existing liabilities under technology upgradation fund scheme (TUFS).
"The outlook for synthetic yarn exports looks bleak due to falling cotton yarn prices and also due to the China factor," Maral Overseas Ltd President Suresh Maheshwari said.
In a volatile foreign exchange currency market, the Yuan slid down further on Thursday at 6.40 per US dollar and the rupee too slipped below the `65 mark.