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Slowing Textile Exports Spark Fears of Job Losses in India
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Slowing Textile Exports Spark Fears of Job Losses in India

Even as the Government of India is aiming at doubling the textile exports from current $42 billion to almost $100 billion in the next five years, the global economic slowdown and the escalating costs of the Russia-Ukraine war have come as rude shock for the country’s one of the largest employment-generating sectors.

Demand drops in US, Europe

With a sharp decline in the demand from the US and European markets, exports of cotton yarn and handloom products from India have plunged to 40 percent ($767.50 million) in comparison to the last year, triggering massive layoffs and salary cuts in the labor-intensive textile industry. 

The textile hub in Tiruppur (Tamil Nadu), which employs nearly six lakh semi-skilled textile workers, is the hardest hit. If some reports are to be believed, 20,000 workers in the textile industry in Sonepat, Haryana, have been out of the job due to no work. In neighboring Panipat, the foreign textiles business has registered a 50 percent decline. Consequently, dyeing units have also been either mostly shut or running for a reduced number of days. “A four-day week is being considered and almost 90,000 people have taken a salary cut of 40 per cent,” says Bhim Singh Rana, president, of Dyers’ Association.

Preparing textile items for global trade

Escalating input costs 

With the raw material becoming costlier and other inputs costs rising steadily, textile units in Surat and Andhra Pradesh, too, have cut short the number of working days. “

“As there are no enough orders, units are operating for four to five days a week. Salary cuts and reducing the operational days are ways to keep the entire workforce, which is dependent on textile manufacturing units, employed. If the war continues and demand slows down further, the number of operating days will fall further," say Raja M Shanmugam, former president, Tirupur Exporters’ Association.

Govt allays fears

To allay the rising fears of further negative impact, Commerce Minister Piyush Goyal has reaffirmed that despite the negative headwinds, India’s merchandise exports would soon be back on track. “Businesses never panic over a monthly up-down. There have been a number of external headwinds, Covid, a war that sent the commodity prices shooting up, and a decline in demand in western countries… but India's merchandise trade will grow by about 10-12% annually.”

Experts too believe that as the price of cotton yarn is falling and exporters have started getting orders, we may see an uptick in the upcoming months. “In April and May, yarn price jumped to Rs 440 per kg. We were not able produce goods for exports as we found it difficult to ink contracts at the right price with importers and buyers. Currently, the price of 40s and 30s count of yarn is below Rs 350 per kg. I hope we can finalize new orders and bring things back on track.” C Ramasamy, proprietor, Harvey Exports. 

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