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DeMote Impact: Export Only Solace But Holidays May Thwart Yarn Exporters

20 Dec 2016 11:15 am
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MUMBAI (Commoditiescontrol) – Demonetisation has severely compressed domestic demand for apparel and textiles, leaving producers to look at exports, particularly yarns. For yarns, about 74% is sold in domestic market while 26% is shipped to overseas markets. This year, exporters had an added advantage of depreciating Indian Rupee, which make goods cheaper for importing countries.

Sources said that if Rupee depreciation support continues, yarn market proportion can change with exports accounting for 40% and 60% domestic.

But with demonetization, this advantage is apparently loss as yarn production has slowed down due to weakening demand from domestic fabric makers. The worst hit is the demin industry, whose revival is going to be very slow. Even in knitting, about 60-70% of capacity were closed but now are slowly restarting. While output will recover sooner or later, what remains to be seen is how exporters will cope up in the ensuing vacation season.

Exporters are likely to face difficulties as the Christmas holidays are approaching with just a week to go. All global markets remain close during this period for about two weeks. Further, the Chinese New Year holidays will begin from 28 January to 20 February. During this long holiday, majority of textile units remain shut as labourer and customs will be on a vacation. So, any export consignment shipped from India will remain stuck at the Chinese port itself.

In the interim, as currency issue eases by mid-January as per RBI’s claim, textile production will resume but will be largely for domestic market as exports will take a backseat due to holidays and no buying season seen on the horizon as of now.

(By Commoditiescontrol Bureau; +91-22-40015522)


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