Although the markets have stabilised following the global pandemic and the textile sector has seen strong growth, certain textile processing facilities in South Gujarat have closed in recent months as a result of declining demand for their goods.
In South Gujarat, there are 400 textile processing facilities, and at least 20 large facilities have closed. The textile dyeing and printing businesses that shut down had a daily output capacity of 1 lakh metres and a monthly revenue of 5 crore rupees.
No shutdown has been reported in Ahmedabad, though, where there is a cluster of about 110 textile production facilities. However, the units in Ahmedabad are significantly scaling back on their operations.
“At least 20 textile processing units have closed down over the past few months. They were big players. These units had a turnover of Rs 5 crore per month,” said Jitendra Vakhariya, president of South Gujarat Textile Processors Association (SGTPA).
One-fifth of these 20 units have already been sold to recoup losses, and the remaining one-fifth are being used to produce other goods. Banks reportedly closed at least three processing facilities that were unable to pay back their loans. The processors’ company has suffered due to the decline in demand for textile products. The functional units are finding it difficult in some situations to break even.
“There is considerable drop in demand for sari, which is the main product that Surat supplies across India. Those units which are working are also facing tough competition and they are hardly making any profit,” said Kamal Tulsian, president of Pandesara Industrial Association. Meanwhile, in Ahmedabad, the units have downsized their operations.
“The demand has declined both in the domestic as well as international market. As a consequence, textile processing units – which mostly carry out outsourced jobs from other textile mills – are out of business. With lack of orders, the capacity utilisation in certain units has plunged to 30% in the past month. Units are primarily functional by fulfilling past orders while fresh orders are missing,” said Naresh Sharma, a member of the Ahmedabad Textile Processors’ Association (ATPA).
He claims that the cost of grey cloth has plummeted since cotton prices are still unstable. The viability of our business is being impacted, and as a result, many units are refusing orders at reduced prices because they will result in losses, according to Sharma.
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