positive and negative impact of cotton and silk industries in India
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: China’s coronavirus shutdown will affect the Indian textile and apparel industry, according to the Clothing Manufacturers Association of India (CMAI). While there will be some negative impact, there will be some positive ones too.
A release issued by the association on Thursday said that the prevailing situation in China along with the uncertainty of production commencing is posing a major issue for Indian manufacturers who are dependent on supply of raw materials from China. The association said that the global apparel brands will have to look at alternate manufacturing destinations such as India.
On an average, India exports 20-25 million kg of cotton yarn a month to China. Cotton yarn prices have fallen by 3-4% in domestic market as traders anticipate a curtailed demand from China due to the prevailing situation there. Further prolonging of the coronavirus will result in a decline in China’s imports of cotton yarn and hence, impact the cotton yarn export business of India. This will divert India’s surplus cotton yarn to the domestic market, further reducing the price of cotton yarn.
India imports US$ 460 million worth of synthetic yarn and US$ 360 million worth of synthetic fabric from China annually. It also imports over US$ 140 million worth of accessories like buttons, zippers, hangers and needles. India does not have the domestic supply base to cater to such a huge demand of these raw materials.
With the epidemic, Chinese textile factories have halted operations since the Chinese New Year. If the outbreak continues, Indian garment manufacturers will need to look at other alternatives, including local sourcing, which in turn may increase the finished goods cost by 3-5%. In addition to this, identifying vendors in such a short time can take a toll on lead times, quality and cost.
China is importing large quantities of medical protective gears including surgical masks and protective clothing across the globe. Sales of such products in other South East countries and even western nations has jumped drastically. The supply of such products is not able to keep up with the demand.