Since New Year’s Day, news about the Indian textile industry has been flying all over the place. From the skyrocketing price of cotton yarn to strikes calling for a ban on cotton exports, the news about the Indian textile industry is dizzying.
The textile situation in India is very good
With the epidemic in India under control, India’s domestic textile industry has been in good shape since Diwali 2021 (November 4, 2021), with smooth production and sales of textile mills and increasing order returns. According to data from the Indian Ministry of Industry and Commerce, India’s apparel exports in December 2021 were US$1.46 billion, a year-on-year increase of 22% and a month-on-month increase of 36.45%; India’s cotton yarn, fabrics and home textiles exports in December were US$1.44 billion, a year-on-year increase of 36.45%. An increase of 46% and a month-on-month increase of 17.07%. From October to December 2021, Indian cotton futures rose by 31%, spot prices rose by more than 70%, domestic cotton yarn prices rose by 15%, and export prices rose by 27%.
TEA urges Indian government to ban cotton exports
In view of the abnormal rise in cotton and cotton yarn prices in India, the Tiruppur Exporters Association (TEA) has called for a strike from January 17 to 8. More than 600,000 workers and 2,000 direct exporters will participate in the strike. TEA said the Indian government should ban cotton exports.
TEA Chairman Raja M Shanmugham said: “The increase in exports of cotton and cotton yarn from India is benefiting our competitors. India’s share in knitted garment exports is only 4%, compared with 39% in China, 13% in Vietnam, and 13% in Bangladesh. is 14%. The government should ban cotton exports so that the domestic industry can compete in the international market and India can benefit from value addition. If necessary, increasing the minimum support price (MSP) can protect the interests of farmers.”
This issue has attracted the attention of the government. Textile industry representatives have submitted a memorandum to Textile Minister Piyush Goyal seeking government intervention.
TEA also urged the government to stop cotton futures trading because investors’ trading activities also led to rising cotton prices.
Shanmugham said that in order to meet export orders, the industry is currently producing at full capacity, but the recent increase in cotton and cotton yarn prices has worsened the situation for exporters and manufacturers. The additional cost is unbearable for them and has plunged Tiruppur’s garment units into a deep crisis. TEA has asked other textile organizations such as the Textile Mills Association, SISA, TASMA and ITF to appeal to their members not to increase the price of cotton yarn.
On January 12, USDA’s supply and demand forecast lowered U.S. and global cotton stocks, spurring ICE futures to rise nearly 300 points during the session. Subsequent profit taking suppressed cotton prices and gave up half of the gains. Judging from supply and demand data, U.S. and global cotton fundamentals have tightened unexpectedly. Among them, India’s exports in the new year are expected to remain at 1.263 million tons, and India’s ending stocks are reduced by 152,000 tons to 2.208 million tons. The report is mildly positive for the market as a whole, and cotton prices will maintain a steady trend. Undoubtedly, Indian cotton prices will remain strong in the short term stimulated by the report.
Appeal from the Indian textile industry
Cut 10% tariff on imported cotton
Since the New Year holiday, cotton imports from India’s South Asia region have been particularly active, and India’s foreign cotton purchases have been very active. On the one hand, yarn prices have strengthened (combed yarn has increased by 5-6%), and on the other hand, the supply of new cotton has been insufficient. It is understood that because U.S. cotton, Brazilian cotton and West African cotton are blocked in port shipments, Bangladesh’s strong demand for Indian cotton has also boosted India’s domestic cotton prices and increased India’s demand for imported cotton. Demand has increased significantly.
In addition, India is planning to open up its rapid growth space for textiles and apparel. Recently, the Indian textile industry has strongly called for reducing the current import tariff of 10%.
Industry insiders said that due to the current high international cotton prices, tax reductions and exemptions on imported cotton will not cause fluctuations in the domestic market. Therefore, the elimination of cotton import tariffs will not only help ensure cotton supply for textile companies, but can even calm market sentiment and adjust the exchange rate of the rupee against the US dollar.
Vietnam’s textile exports are expected to resume growth in 2022
Affected by the epidemic, many places in Vietnam have been blocked since the third quarter of 2021. Vietnam’s textile exports have been affected by the suspension of operations of local factories. With the gradual unblocking in the fourth quarter, Vietnam’s textile exports increased significantly in November, with a year-on-year increase of 40.0%.
In recent years, China’s labor costs have increased and environmental protection has become stricter. The growth rate of Vietnam’s textile exports has been significantly better than that of China. Especially in 2018 and 2019 after the Sino-US trade war, the growth rates of Vietnam’s textile exports were 15.6% and 7.5% respectively. The growth rate of China’s textile export value was 8.1% and 0.9%. From January to October 2021, the growth rate of Vietnam’s textile export value was 4.4%, and the growth rate of China’s textile export value was -9.1%.
As Vietnam gradually unblocked itself in the fourth quarter, the growth rate of Vietnam’s textile exports increased significantly in November. The production capacity of leading high-quality supply chain companies in Vietnam’s textile manufacturing sector with multinational production capacity has gradually returned to normal. Vietnam’s textile exports in 2022 are expected to be in 2021. on the basis of achieving recovery of growth.
There is a big pain point in the textile and apparel industry, which is the inventory problem. How to build a supply chain with a rapid response mechanism to meet customer needs without causing a large amount of inventory has always been a difficulty. Therefore, for textile and garment enterprises, establishing and improving supply chains and reducing inventory pressure are one of the core means to maintain superiority in the future competition of survival of the fittest in the industry.
The current changes in consumer demand in the domestic textile and apparel industry mainly include:
First, from the perspective of demand, as clothing is a non-standard product, people’s consumption is relatively more personalized. At present, textile and clothing consumption is personalized, and companies need to form obvious advantages in marketing, cost-effectiveness, brand influence, etc. to seize market share.
In addition, from the perspective of exports, although China is still the world’s largest exporter of ready-made garments, the growth rate of China’s ready-made garment exports has shown a downward trend year by year, and the market share continues to decline judging from the decline in sales volume. Therefore, in the context of the continued decline in the growth rate of my country’s textile and apparel exports, it will become more and more difficult for domestic textile and apparel brands to go overseas. It is increasingly necessary for domestic enterprises to accelerate the layout and innovation of improving product quality, supply chain response mechanisms, market guidance and other aspects. Forcing the development of my country’s supply chain system.
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