India – A Sleeping Giant?

ven after a slash in import duty on cotton, the textile industry still seems to be
reeling under high-cost pressures. To ease the tightened noose on input costs, the Confederation of
Indian Textile Industry (CITI) has made representations with the union Ministry of Textiles for
continuance of interest subvention on packing credit across the industry’s value chain. The textile
industry, which contributes around 17 percent to total exports, had been enjoying a 4-percent
interest-rate reduction on packing credit.

However, with the Reserve Bank of India issuing a notice for a premature termination of the
interest subvention from Sept. 30, 2008, onward – instead of from March 31, 2009, as announced
previously – exporters will have to access credit at market rates. Textile exporters get a packing
credit, which functions as their working capital on the basis of their order books around 180 days
before shipment and 90 days after shipment.

The relative equilibrium in global fiber consumption is the object of constant change. In
the recent past, reference was almost always made to a ratio of around 50:50 between natural and
man-made fibers. At present, cotton only has a 37-percent share of global fiber consumption. The
use of technical textiles and nonwovens plays an outstanding role in this connection. Experts
predict that by 2010, man-made fibers will have a global market share of 72 percent; cotton, 26
percent; and wool, 2 percent. Long-staple fibers have enormous potential but are insufficiently
exploited by the countries capable of producing them. Jute and other bast fibers are biodegradable
and therefore enjoy a major sympathy bonus. This advantage should be used to a far greater extent
by the respective governments. It can only be a matter of time before India’s textile industry will
awake from the actual economic situation. It’s time to consolidate and get ready for the next

September/October 2008