January 27, 2008

India's textile industry in problems

Already plagued by the impact of a stronger rupee, India's textile and garment industry has been dealt another blow by weaker US demand. Some 55m jobs in India depend on the industry, the second-largest employer after agriculture.

As the cost of making textile and garments in India rises, customers are shifting their orders to countries with weaker currencies such as Sri Lanka, Vietnam and Bangladesh. By some estimates, 500,000 jobs in the industry have been cut in India since the rupee rose 13-15 per cent over the course of last year.

The textile industry is clamoring for government relief. A proposal to give tax refunds to exporters and reduce interest rates on loans is in the works. Given the situation with demand from the US, India's textile industry is looking to develop other export markets. It has targeted Asia, Latin America and Africa. Some Indian manufacturers are even setting up factories in China.

No comments: