India: High interest, raw material cost hit textile industry

High interest rates, lack of credit, high raw material prices and recession in the US and Europe have hurt the country's cotton textile industry, the Economic Survey said on Thursday.
All these factors, the Survey noted, lead to a decline in textile fabric production by 1.9 per cent to 54,966 million square metres in 2008-09.
The powerloom and handloom sector saw a decline in production by 3.1 per cent and 3.9 per cent, respectively, in 2008-09 over the year-ago period.
"Factors such as higher price of cotton, high interest rates, problems in credit availability and demand slowdown in major importing countries led to the decline in cotton textiles," the Survey said.
However, the hosiery industry saw a modest increase of 2.3 per cent and the mill sector registered a marginal growth rate of 0.8 per cent in the last fiscal compared to the previous year.
With export orders drying up and domestic demand slackening, the industry is going through difficult times.
Textile Minister Dayanidhi Maran earlier said the country's textile exports declined by about 10 per cent in 2008-09 to about USD 20 billion compared to the previous fiscal due to slump in demand in economies like the US and Europe.
The textile industry also suffered because of the high cost of raw cotton. The government had increased the minimum support price by 40 per cent in 2008-09.
Having grown over 11 per cent in the first six months of 2008-09, textile exports started coming down in October, ending the fiscal with an overall decline of 10 per cent.
Among textile exports, the worst-hit was handicrafts, which saw a decline of 48 per cent in 2008-09, followed by cotton yarn and jute products, which fell by 11.8 per cent and 9.5 per cent, respectively.
The industry, in which 35 million people work, is the largest employer after agriculture.