Production halts in AP mills;global recession hit Indian textiles

Production halt in Andhra Pradesh—based spinning mills can be considered as a direct hit on the Indian textile industry due to the global slowdown.AP Textile Mills Association has announced that around 125—135 mills will stop production due to unprecedented fall in demand.Slower economic growth,high inflation and energy crisis have dented market sen—timents across the world.

The association’s president Lanka Raghurami Reddy informed media that mills in the states were operating with 50 per cent capacity earlier but now they have decided to close them due to soaring operational costs of production amid poor demand.Reddy said that the recession is disrupting the Indian textile industry.The industry is stuck in a vicious cycle of slower demand in downstream industry and higher cost of production.

According to industry sources,there are 125 textile mills in Andhra Pradesh with a combined capacity of 35 lakh spindles.Only 100 textile mills were running at partial capacity.The main reason for this situation is slug—gish demand and a fall in cotton prices.

The recent price trends in the yarn market explains the woes of spin—ning mills.The entire value chain of the textile industry is facing an impact of the global slowdown.Trade sources said that garment importers in major markets of the developed world are facing sluggish buying in retail stores.Therefore,they are giving limited new orders to exporters.Exporters are also facing problems regarding order cancellations,acceptance of export con—signments by importers and payment from the buyers.

A trader from Tiruppur said,“Russia—Ukraine war has caused an en—ergy crisis which led to higher inflation across the world.The global economy was already weak due to COVID—19 and is not able to bear the current eco—nomic shocks.High inflation and joblessness at consumer level has not left any liquidity cushion for discretionary expenditure which is the real cause of concern for the textile industry.”

Not only Andhra Pradesh—based spinning mills but the entire industry in the country is facing similar challenges.Recent price fall in cotton and polyester fibre could not encourage the downstream industry which is fac—ing a lack of confidence regarding future demand.Spinning mills in other states across India are running at 40—60 per cent capacity.Mills are facing slower demand even for cheaper polyester yarn.However,yarn market wit—nessed slight improvement recently,but whether the uptrend will continue or not remains to be seen.