Global rating agency Fitch retained its negative outlook for the Indian textile industry saying exports could recover only with an improvement in economic activities.
"The outlook for the sector (textile) remains negative, with prospects of recovery in the export segment only likely to accompany a general economic recovery," it said.
Domestic garment exporters reported production cuts which in turn created capacity under-utilisation for yarn producers, it said.
Textile exports fell by 10 per cent to about USD 20 billion in 2008-09 due to slump in demand in the US and Europe, the main markets for Indian products.
Earlier this month, the government had provided Rs 2,546 crore under a subsidy scheme to industry that is seen as stimulus to the sector, impacted by the global downturn.
"This is expected to ease liquidity pressures...," it said.
It added that the synthetic textile segment could see a rise in raw material prices because of steadily rising crude oil prices, while bearing the burden of an increased excise duty, it added.
