Indian Textile Industry

Global Crisis & it’s Impact

1
 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.

3
 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.
4
 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.
5
 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
7
 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
9
 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
11
12
 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.

13
 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).
14
 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 Tax
15
 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)

16
 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
17
THANK YOU

18