Recent Challenges Faced By Indian Textile Mills & Drop in Yarn Export

The textile industry of India contributes a whopping 12% to the nation’s forex earnings! However, the economic slowdown in the global market has had its adverse effects on the Indian Textile Industry, in addition to the various other verticals. While the overall textile and garment exports of the country rose by almost 4% in the current financial year, but it has still fallen short of the $45 billion target, pertaining to the massive decline in China’s demand with respect to cotton and yarn.

At present, the spinning mills have up to 10% material in excess capacity thereby resulting in higher inventory overheads and lower liquidity. The higher tariffs that have been imposed on products of these mills in all the major international markets, has further aggravated the issue.

What Impact Yuan devaluation can have on Indian textile industries?

A Sneak Peak – What is Yuan Devaluation?

China's Central Bank, devalued its own currency by close to 6% earlier this week, simply to boost exports in an attempt to recoup from the slowdown in its domestic economy and recent stock market crash. 

The Impact- What It means for India

The recent devaluation of Chinese currency Yuan, is called to be a bold move on the part of its Government, considering the fact, that while it will boost the Chinese exports, this move will eventually harm a large section of other markets, worldwide. In fact, this came as a blow to the Indian export market given the situation that the markets have already been going week in the recent past due to the recessionary conditions in the global arena! Now the question arises, where is it that it hurt the most? Sadly the answer is not just singular. This move on China’s part is understood to interfere with India’s textile industry, chemicals, metals, consumables as well as the e-commerce sector. Further the depreciation in Yuan’s value may cause Chinese people to opt local brands over imported ones. India will face substantial challenges due to this situation because china is a big market for goods such as cotton copper and chemicals exported from India. If china strategically keeps reducing the value of its currency in comparison to rupee, Indian markets might get flooded with cheaper Chinese goods available in the market.