A slowdown in the U.S. economy may lead to difficulties for the Indian textile industry
Last year, due to the appreciation of the rupee, the Indian textile industry cut 150,000 jobs. However, the worst time for the textile industry has not yet arrived. The economic recession in the United States has not only caused the textile industry to decline, but will also cause the textile industry to lay off another 150,000 workers. The U.S. market accounts for approximately 35% of India’s textile product exports. The slowdown in exports to the U.S. market will directly cause India’s exports to fall back. Rahul Mehta, President of the Garment Manufacturing Association of India (CMAI), expressed the industry’s concerns. 'For example, in 2008-09, clothing exports to the United States are expected to fall by 15-20%, and the impact on overall textile product exports is 10-15%. There is also a speculation that scares textile companies. There are 5.8 million employees in the apparel industry. Last year, the rupee appreciated by nearly 12%, resulting in 150,000 unemployment in the apparel industry. Mehta said that the scale of textile exports continues to decline, and the clothing industry will cut another 1.5 million employees. In fact, clothing exports in 2006-07 reached approximately 8.7 billion U.S. dollars, and exports this year will be less than 8 billion U.S. dollars. In response to the US economic recession, the textile industry's exports will be pulled down to 7.3 billion U.S. dollars in the fiscal year ending in March 2009. Among the textile companies, the knitting industry exports 3 billion U.S. dollars to the United States, accounting for 45% of the total exports, and the knitting industry will suffer the most impact. Tirupur, an Indian knitwear center, accounts for 56% of the country’s exports. The state has already laid off 16,000 employees last year. A Sakthivel, president of the Tirupur Exporters Association, said that if exports to the United States decrease, we will have to cut another 15,000 people. The textile industry has begun to take countermeasures. 10 Asian countries, including China, Vietnam, Hong Kong and India, have formed the Asian Apparel Alliance (AAF) to expand clothing trade between Asian countries and reduce exports to the United States. AAF Chairman Fu Mehta said that we realize that a large number of exports to the single market will be detrimental to the development of our textile industry. As a measure that can be taken immediately, Mehta hopes that the central government will refund the tariffs levied at 5 to 6% of the FOB prices of various states, and at the same time reduce bank interest to bring it in line with international bank interest, and also to reform the labor law. He said that the government should take all measures to achieve the goal in one step, and should not adopt a procrastination style. Sakthivel said that only the government can save the textile industry and provide relief measures for the textile industry, including the abolition of handling fees, all state taxes and central government taxes.