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CONTENTS

CONTENTS – FEBRUARY 2011

Executive Pages : January 2011

Editorial : November 2010

Increase Productivity and Learn Risk Management to Counter/Neutralize the Impact of Rising Rupee

Textile & Clothing is an important sector in India’s export basket. This sector has negligible use of imported inputs and is an employer of a large number of people in India. Rupee appreciation in the past has resulted in loss in export growth both in textile as well as in the readymade garment (RMG) sector. Clothing sector is highly labour intensive. An investment of Rs.100 Million generates 500 direct and 200 indirect jobs. Around 5.8 million people are engaged in apparel industry. Any slowdown in the export growth will adversely affect the employment generation. In fact, in many sub categories, job losses are already reported. It is estimated that for every percentage point of appreciation, profitability of exports in the textile sector is hit by 1.2%.

Textile & Clothing is an important sector in India’s export basket. This sector has negligible use of imported inputs and is an employer of a large number of people in India. Rupee appreciation in the past has resulted in loss in export growth both in textile as well as in the readymade garment (RMG) sector. Clothing sector is highly labour intensive. An investment of Rs.100 Million generates 500 direct and 200 indirect jobs. Around 5.8 million people are engaged in apparel industry. Any slowdown in the export growth will adversely affect the employment generation. In fact, in many sub categories, job losses are already reported. It is estimated that for every percentage point of appreciation, profitability of exports in the textile sector is hit by 1.2%.
RBI has clearly indicated that it is going to intervene to contain the rise in rupee to avoid it’s negative impact on exporters. As India’s exports are at stake, government of India also needs to gear up to take appropriate steps to neutralize the effect of rupee appreciation, mainly in the form of providing several incentives to exporters and enhancing some of the existing ones. It is widely feared that profits will tank for the textile industry if the rupee goes below 44 against the US dollar. The rupee’s rise will certainly trim down profit margins and hit export competitiveness. Firms should, therefore, handle their foreign exchange with due care. As India is gradually getting integrated with the world economy, currency volatility will become a normal affair. Similarly, it is important for the firms – that are already enjoying several incentives for quite sometime – to enhance their productivity with the help of such incentives. Higher productivity leads to lower cost of production, and thus it can play a key role in neutralizing the loss that may occur due to currency appreciation. Within the industry also, we can see that the effect of rupee appreciation varies among firms. More productive firms can absorb the loss in a better way. Furthermore, firms need to learn sophisticated methods of risk management to maintain a favourable foreign currency hedge in view of the volatile currency market which has already become the order of the day.
Chinese are very much under pressure to appreciate their currency. The appreciation of the yuan, together with rising raw material and labor costs, has already squeezed profit margins in China’s textile industry. The yuan rose 21 percent against the U.S. dollar from 2005 to 2008. It is feared that if the yuan actually appreciates 5 percent from the current level against the U.S. dollar, then over half of China’s home textile companies will go bankrupt.
To cope with yuan appreciation, Chinese textile companies have already started vigorously promoting industry upgradation and technological innovation to achieve value addition. They have also started making structural adjustment to focus on the huge domestic market.
We got to do the same to be in the business of exports.

GD Jasuja

Editorial – January 2011

The World Welcomes 2011 With High Hopes

There is a general feeling that the world markets are on the recovery path after the nightmares of 2008 and 2009. This is especially true for the textile industry where we notice an upswing, even in so-called high-labor-cost countries – like Switzerland, Germany, Italy and even the United States – where leading machinery manufacturers have started reporting higher demand for their specialised machinery thanks to the booming Asian markets. In view of increasing purchasing power, consumers in these emerging markets are demanding better quality products and are ready to pay a premium for the branded goods. There is also considerable growth in demand in these countries.

 

The Swiss textile machinery makers – Uster Technologies AG and Loepfe Brothers Ltd. – are reported to have confirmed that the demand for machineries that help in quality control and quality enhancement has particularly grown steeply due to greater emphasis being put on obtaining improved product quality. The spinning sector has shown considerable growth as this sector is mainly responsible for controlling a number of basic and fundamental parameters which affect both quality and costs including that of the raw material. Since the raw material contributes to 55%-65% of total production costs, it is vital to maximize the yield and minimize waste. Therefore, to ensure a very efficient overall process/production management mills need to have appropriate instruments, measurements and systematic analysis.

 

Similarly, the demand for weaving machineries and that for non-wovens and technical textiles is also on the rise globally. There is increasing interest in digital printing, too. The increased demand for textile machineries is reported from countries like China, India, Japan, Taiwan, Thailand and South Korea. Most stakeholders in the industry are hopeful that 2011 will be an even better year, thanks also to the forthcoming ITMA 2011 in Barcelona which will be a good indicator to gauge the industry’s performance and direction. The upswing recorded by some countries are : Germany (7.1%), Italy (6.0%), Brazil (4.8%) and the US (3.8%). People are expecting that the current positive trend will not only continue but will get a boost due to the forthcoming ITMA in Barcelona.

However, the main concern, at present, is the volatility prevailing among the major world currencies such as the U.S. dollar, the euro and the renminbi. Another difficulty being faced by the textile industry, in particular, are the high market prices of key raw materials such as cotton that play a dominant role in deciding the health of the industry.

 

In spite of these concerns, there is a widespread ‘feel good’ effect and the overall outlook for the new year clearly seems to be quite positive. So, let’s welcome 2011 with open and optimistic mind. NCM wishes its readers a very very Happy and Prosperous New Year.

GD Jasuja

7 EDITORIAL : "THINK GLOBALLY, ACT STRATEGICALLY"

11 EXECUTIVE PAGES

* Recipe for Wrinkle Resistant Finish from Kunal

* Nano Textiles : Facts Behind the Fabrics

* Karl Meyer's TM2 Tricot M/c for Mattress Covers

* 3D Fibrin Textiles for the Biomedical Sector

* Alexium Inc:Leader in Reactive Surface Treatment

* Cornleaf Yarn from PLA Biopolymer

* Montex 6500-6F Stenter for Yelcin Tekstil, Turkey  

* Trutzscler Spinning Machines for Vietnam

* German Textile Machinery in Brazil

* Colourtex Recipe for 100% PES Rusgulla Fabric

34 INTERNATIONAL DENIM CONFERENCE

ORGANISED BY TEXTILE ASSOCIATION (INDIA) –

AHMEDABAD UNIT AND FIBRE2FASHION.COM

AT IIM, AHMEDABAD

42 ENGYME BIOTECHNOLOGY FOR SUSTAINABLE  TEXTILES

58 INTERNATIONAL BUSINESS PAGES

* The Impact of World Recession on the Textile  and Garment Industries of Asia

* Retail Apparel Market in Canada

* International News & Developments

94 News Briefs