{LONGTERMINVESTORS} Yuan devaluation may hit India's spinning industry

Yuan devaluation may hit India's spinning industry

January 15, 2016 (India)

India's spinning industry in the textile sector runs the risk of
taking a hit due to the downturn in the Chinese economy. China
accounts for 40 per cent of India's total cotton yarn exports which is
likely to come down and create a glut in the domestic market,
according to a newspaper report.

The Indian apparel exports are also likely to be impacted due to a
depreciation of the Yuan. India's garment exports had been growing at
a rate of 7-8 per cent till December of the current fiscal against an
anticipated growth of 13-15 per cent, the report said.

India's apparel exports to markets like Europe and the US have been
sluggish due to overall economic slowdown. The weakening of Yuan by 3
per cent and apprehensions of further depreciation of Chinese currency
has sparked concerns for the Indian textile industry as China is a
major competitor of garments and made-ups and importer of cotton yarn
from India.

Of the total $40 billion worth textiles and clothing exports from
India, garment exports are worth $16 billion, while yarn, fabric and
made-ups together amount to $21 billion.

India's strength lies in the value-added, hand-embroidered, casual
fashion garments consisting of small orders, whereas China has its
strength in high value, basic garments. If depreciation of Yuan
continues, Indian garment exporters could be affected as both
countries have access to the common markets of US and European Union,
said Rahul Mehta, President International Apparel Federation and
Clothing Manufactures' Association of India.

Echoing his views, Raman Saluja, a Ludhiana-based exporter said, even
as Indian garment and made-up exporters were tapping newer markets
following stiff competition from China, the currency depreciation
could upset their apple carts owing to the slowdown in Europe.
According to Saluja, their revenues had already been hit by 10-15per
cent and there was no further scope for cost-cutting.

According to industry experts, while cotton yarn risks the biggest
hit, the cotton and hand-made segment in the domestic apparel market
is likely to remain unaffected from the Chinese currency depreciation.
According to Daman Oswal, director of Nahar Industrial Enterprises
Limited, it was high time the Indian government revisited its decision
of excluding spinning industry from the interest subvention of 3 per
cent.

The textiles industry is apprehensive that the withdrawal of focus
market scheme, duty drawback and interest subvention had accentuated
the challenges of Indian textile exporters and Yuan depreciation could
further aggravate the situation. (SH)


Fibre2Fashion News

--
You received this message because you are subscribed to the Google Groups "LONGTERMINVESTORSRESEARCH" group.
To unsubscribe from this group and stop receiving emails from it, send an email to longterminvestorsresearch+unsubscribe@googlegroups.com.
Visit this group at https://groups.google.com/group/longterminvestorsresearch.
For more options, visit https://groups.google.com/d/optout.