The Rs.1,30,000 crore Indian textile industry is concerned of rising crude oil prices and fierce competition from China in world trade. The textile industry is less optimistic over their performance in coming quarter than it was in the July-September quarter. This is revealed by the third consecutive survey on Business Confidence of Indian textile industry for the quarter October to December 2005, conducted by YarnsandFibers.
The man-made fiber industry, in particular, is worried on the crude price front while cotton textile segment is content with the bumper cotton crop and low fiber prices. However, the entire textile segment is worried over competition from China, as it has cost advantage over India. Textile companies want Government policies to be favourable and in line those in the neighbouring textile nations. The Government also needs to work on infrastructure, labour and power reforms and friendlier fiscal and export policies to enhance competition. A majority of the firms surveyed have indicated that power supply and infrastructure bottlenecks would impede their performance in the current quarter. With trade barriers removed the textile Ministry has set an ambitious export target of US$50 billion by 2010. To achieve this, the industry needs an investment of about Rs.1,40,000 crore, a colossal task as current investments are just a trickle of the total requirement. Thus an environment has to be made conducive investments to flow.
Talking about domestic demand the Indian economy is posed to grow by 6.8-7.0% in 2005-06 over and above the 6.9% growth recorded in 2004-05. With two consecutive years posting generous growth in income levels, it is obvious that domestic demand is likely to expand significantly. However, inflationary trend may set in led by the high crude oil prices.
The YarnsandFibers' third consecutive survey on Indian textile business confidence was held in early October. The three business confidence indices
- the YnFx Business Confidence Index (measure of future prospect), YnFx Current Business Status Index (measure of current status) and YnFx Business Margin Expectation Index (measure of pricing input and output) - which emerged from the survey explains the pessimism and constraints textile firms would face to enhance their performance.
The survey results reveal that textile firms are less optimistic over their likely performance in the current quarter of October to December 2005 compared to their aspirations and actual performance in the previous quarter. The YnFx Business Confidence Index for the quarter October to December 2005 stands at 81.6 while the current business status index for the July-September quarter is at 80.3. The Business Confidence Index for July-September quarter was a shade higher at 83.9 and even higher at 86.5 in the June quarter.
source: ezinearticles.com
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