ITMF survey: 44% participants expect favourable change in H1 2024

Global textile industry is facing slowdown since second half of 2022. After reeling under the poor performance during last year 2023, the industry is pinning hope on new year 2024. 44 per cent participants in global textile industry survey expected that the first six months’ time of new year 2024 will see favourable change in the business situation. Zurich, Switzerland based 119-year-old International Textile Manufacturers Federation (ITMF) had conducted the survey in November 2023 and released its findings recently. 

In a press release issued from Coimbatore, India, Dr. KV Srinivasan, the newly elected president of ITMF, which represents the entire textile value chain across the world, stated that around 44 per cent of the respondents have reported some sort of cancellations of orders during the last four months, albeit only 5 per cent reported major cancellations of 30 per cent or more. Furthermore, he stated that the survey also aimed at identifying the possibility of revival of the fortunes of the industry before May 2024. The survey also revealed that 44 per cent of participants said that in six months’ time they expect the business situation to be more favourable, while 16 per cent expect it to be less favourable. The balance of +28 percentage points (pp) in November is higher than the +20 pp in September.

The press release said that the textile industry across the globe has been facing an unprecedented and prolonged slowdown from the second half of 2022 after witnessing a pent-up demand immediately after COVID-19 lockdown in almost all the textile manufacturing countries including East Asia, Southeast Asia, South Asia, Africa, Europe, North and Central America and South America. The retailers located in countries like the US and the EU, major export markets, had built high-cost inventory during 2021-22 and they continue to struggle to clear the stocks due to weakening demand. Of course, inflation caused by disruption of the supply chains following the lockdowns caused by the COVID pandemic as well as geopolitical issues, especially prolonged Ukraine-Russia war, also had a toll on demand. In fact, few retailers/brands still have too much merchandise in their warehouses.

Dr. Srinivasan stated that the global textile industry has been facing unprecedented challenges. He pointed out that ITMF’s latest Global Textile Industry Survey conducted in November 2023 revealed that weakening demand, inflation, geopolitical issues, raw material price volatility, steep increase in energy charges, shortage of labour and rising interest rates have been reported as the major root causes for the slowdown of the global textile industry. Weakening demand has been highlighted by 76 per cent of survey respondents as the major cause for the poor performance of the industry.

ITMF president stated that the textiles and clothing industry in India is the worst affected due to the added challenges on the raw material front (both cotton and man-made fibre) and steep increase in power cost in most of the textile manufacturing states. He stated that urgent policy measure is required to ensure smooth supply of raw material at an internationally competitive rate by removing 11 per cent import duty on cotton, addressing Quality Control Order (QCO) issues and price issues pertaining to PTA, MEG, polyester and viscose and ensure a level playing field. He stated that the Indian government could have commenced the enforcement of QCO on the finished goods as done for technical textiles rather than raw materials that had severe impact on the MMF value chain. 

Dr. Srinivasan stated that huge incentives offered for new investments by several State governments in India have eroded the competitiveness of existing capacity, making them unviable. He added that the industry is already struggling with excess capacity due to mismatch in the supply and demand of quality raw materials in required quantum. 

He pointed out that despite being the second largest manufacturer of raw material in the world, India could not gain any advantage while countries like Bangladesh and Vietnam that do not have a raw material base have achieved exponential growth rate in exports. Indian textile exports have stagnated at $35 billion for more than a decade.  

As a representative of the international body, Dr. Srinivasan suggested the Central and State governments in India to stall the shortsighted policies relating to raw materials, power, labour, and new investments until the industry revives. According to him, a one-year moratorium for payment of loans, conversion of short-term loans into long-term loans, and extending additional working capital are some of the financial relief measures urgently required to prevent the textile units becoming NPAs (non-performing assets) and avoid closures that may throw several lakhs of people out of jobs. Dr. Srinivasan stated that appropriate policy measures with holistic approach are essential to enhance the global competitiveness of the Indian textile industry and take advantage of ‘China Plus One’ strategy.