Search the Internet          Tips  Sites: Finance, Investment

US slowdown hits Indian textile exports

A downturn in the US economy has hit India's textile exports but fresh demand after September could provide a breather to the industry, analysts said on Friday.

India's cotton yarn exports, which account for nearly 30 per cent of the total textile basket, fell to 213.81 million kg in the first five months of 2001 from 241.64 million kg in the same period of the previous year, a leading trade body said.

Total earnings through cotton yarn exports dipped to $589.61 million in the January-May period from $663.98 million in the corresponding period last year, the Cotton Textiles Export Promotion Council said.

"There is a recession in the US which is hitting our sales but we expect the demand to grow when the holiday season is over and people start placing orders around September," the council's executive director, Siddhartha Rajagopal, said.

The United States accounts for nearly a quarter of India's total exports.

Analysts said total cotton textile exports are down by 20 per cent and despite an improvement in demand annual earnings will be down by 10 to 15 per cent.

"Demand after September is likely to be good but it will not be able to make up for the loss already made," an analyst with a leading textile export firm said in Bombay.

Traders warn the demand surge in the second half of 2001 could be due to the Christmas season and not really any improvement in the global demand scenario.

"If we get orders for supplies during Christmas time that means the situation has not changed much but the real good news will be when mills start booking for the first quarter of 2002," a trader said.

Buyers eye Indonesia

Traders said European and US buyers were looking at Indonesia which sells cheaper than India.

"The demand is low and in such a situation buyers look at cheaper products not worrying about the quality. They (importers) are buying more from Indonesia and other countries," he said.

Analysts said textile mills will have to look at more value added products instead of concentrating on yarn and fabric exports.

"There are certain areas where we can do better like garments and that is where we should be concentrating," an analyst said.

India exported 532.11 million kg of cotton yarn in 2000 compared with 534.47 million kg in 1999.

The Indian government has said it is aiming for an overall 18 per cent annual export growth until 2004 to grab one per cent of global trade, up from 0.64 per cent. But analysts say an 18 per cent export growth for this year is an ambitious target.

Textiles account for one-third of India's total export basket.

Exports grew just 5.51 per cent in April down from a storming 20 per cent year-on-year growth rate for 2000-01 (April-March).

Tell us what you think of this report