1) Cotton prices cast shadow on polyester

Business Standard, December 1, 2010

Dilip Kumar Jha & Komal Amit Gera / Mumbai

Skewed demand for synthetic yarn by textile producers, following a dramatic escalation
in cotton prices, has opened opportunities for man-made fibre producers. India’s largest
corporate Reliance Industries Ltd (RIL) will benefit most from the trend.

Faced with enormous demand from both domestic and overseas markets, RIL, which
currently monopolises the fibre market, has raised prices by over Rs 3 per kg across all
products effective Tuesday.

With the revision, the benchmark 115/34 semidull variety of partially oriented yarn (poy),
used to produce polyester yarn, shot up to Rs 96.49 per kg from Rs 93.11 per kg a week
ago. The prices of polyester staple fibre has been revised upwards by Rs 6 per kg to Rs
93 per kg.

The biggest problem for domestic synthetic yarn manufacturers is that RIL, according to
market sources, do not entertain them as it prefers the more remunerative export market.
According to industry sources, RIL has signed huge supply orders with buyers in China
and Pakistan — the two countries that remained short supplied of cotton and, most
importantly, compete with India in the global markets.

“Many south-based synthetic yarn manufacturers met RIL officials late last week,
seeking supply of poy from the company but, their requests were turned down,” said a
senior industry executive who was involved in the discussion.

Prices of man-made fibre which ideally should be linked with the movement of crude oil
prices, have abnormally gone up in tandem with cotton yarn prices in the last one year.

While cotton prices have been revised from Rs 2,700 to Rs 4,400 per mound this year
(now Rs 4,200 per mound), polyester prices have risen sharply — from Rs 63 per
kilogram in September to Rs 110 per kilogram in November.

However, cotton prices are softening due to higher availability with ginners. Owing to
unseasonal rainfalls last week, many ginners could not process and transport cotton. This
lead to a huge stock, which will start rolling out in the market by January. By January-
end, the industry will see a price decline of nearly 20 per cent, said Sunil Khandelwal,
chief financial officer, Alok Industries Ltd.

“Due to pressure on margins, quite a few players have partially diversified their
capacities for polyester cotton blended yarns. Spinners have been replacing cotton with
polyester and viscose for manufacturing cotton-blended yarn. The manmade fibre was
cheaper than cotton. But the consistent increase in demand for the manmade fibre across
the world pushed up the cumulative demand and drove up the prices,” said Sanjay
Nayyar CEO of Confederation of Indian Textiles Industry.

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The sudden jump in the demand for man made fibre is not supported by the increase in
production of raw materials for the man-made fibre and resulted in a disequilibrium in
demand and supply.

V K Ladhiya, the chairman of Indian Spinners Association, told Business Standard that
the availability of PTA and MEG (raw material for polyester) is limited. The global
capacities are limited but the demand has gone up.

He also said that manufacturers lost money in investments for producing the raw material
for the man-made fibre in the past. As a consequence, they recalled some of the
investments. Now that consumption has increased, the prices have gone through the roof.
The price of inputs for polyester have been revised by 20 per cent to 30 per cent.

The total annual consumption of fibre in India is about seven million tonnes. The largest
chunk of this consumption is of cotton (about 3.2 million tonnes) followed by polyester
(2.5 million tonnes), 0.5 million tonnes of rayon and about 80,000 tonnes of acrylic.

The man-made fibre could have provided some cushion to the spinners while the cotton
prices were high. But the incredible increase in price of polyester fibre has put the textile
industry in a tizzy.

2) Yarn exports cap a blow to sector, says industry body

Business Standard, December 3, 2010
BS Reporter / Ahmedabad

The quantitative ceiling of 720 million kg that the Ministry of Textiles has imposed on
the export of cotton yarn during 2010-11 will have far reaching adverse consequences for
all segments in the textile industry of India, the Confederation of Indian Textile Industry
(CITI) said on Thursday.

According to a statement issued by CITI, the export authorisation registration certificates

have already been issued for the entire quantity with a maximum period of 45 days for
shipment. “This decision would push up yarn exports during the next 45 days
considerably, since exports that would have normally taken place during four months up
to March 2011 will now have to be made during the next 45 days. Mills will be forced to
divert supplies from domestic market to export markets during this period, reducing
availability for domestic consumers of yarn," said Shishir Jaipuria, chairman CITI.

The textile industry body stated that there was no shortage of cotton yarn in the domestic
market so far, though there were complaints of inadequate availability from certain
sections of the industry. But now there may be actual shortage for domestic consumers,
though for a limited period, CITI stated.

"Following the restriction on cotton yarn exports from India, international prices for
cotton yarn will shoot up, since India is currently the largest supplier of cotton yarn in the

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global markets. The other major cotton yarn exporting countries such as Pakistan, Turkey
and Indonesia will be the major beneficiaries of this price increase," said Jaipuria.

For the spinning industry of India, the restriction will be a hard blow in many ways. “In
the first place, they will find it difficult to honour some of the commitments made to their
domestic customers, for the next 45 days. And after that, there may be a glut of cotton
yarn in the country, since the domestic consumption can not match the increasing
production of cotton yarn. During January-March 2011, cotton yarn exporters of the
country will not be able to supply any yarn to their overseas customers who have been
importing regularly from them for decades. This will affect their individual reputation as
well as that of India as a reliable supplier of cotton yarn," Jaipuria stated.

Meanwhile, CITI has requested government to reconsider the decision to cap cotton yarn
exports, in view of issues the decision would create. The government has also been asked
to clear the pending quantity of around 60 million kg for which applications had already
been accepted by Textile Commissioner before the ceiling of 720 million kg was
announced, since it would be unreasonable to apply the quantitative ceiling
retrospectively.

3) Cotton yarn export ceiling to hit textile sector

Mills will be forced to divert supplies from domestic market to export markets during this
period, reducing availability for domestic consumers of yarn.
The Hindu Business line, December 3, 2010
Our Bureau, New Delhi

The quantitative ceiling of 720 million kg that the Ministry of Textiles has imposed on
December 1, 2010 on export of cotton yarn during 2010-11 will have adverse
consequences for the textile industry, according to Confederation of Indian Textile
Industry (CITI).

Export Authorisation Registration Certificates have already been issued for the entire
quantity with a maximum period of 45 days for shipment.

In a statement issued here, Mr Shishir Jaipuria, Chairman, CITI, said that this decision
would push up yarn exports over the next 45 days, since exports that would have
normally taken place during four months up to end March 2011 will now have to be made
during the next 45 days.

Mills will be forced to divert supplies from domestic market to export markets during this
period, reducing availability for domestic consumers of yarn, CITI said in a statement.

“There was no shortage of cotton yarn in the domestic market so far, though there were
complaints of inadequate availability from certain sections of the industry. But now there
may be actual shortage for domestic consumers, though for a limited period,” Mr Jaipuria
said.

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Following the restriction on cotton yarn exports from India, international prices for cotton
yarn are slated to shoot up, since India is currently the largest supplier of cotton yarn in
the global markets.

The other major cotton yarn exporting countries such as Pakistan, Turkey and Indonesia
will be the major beneficiaries of this price increase, the statement said.

The CITI Chairman asked the Government to reconsider the decision to cap cotton yarn
exports, in view of the problems that the decision would create.

4) Textiles ministry eyes 25 new integrated parks

Business Standard, December 4, 2010
BS Reporter / Mumbai/ Ahmedabad

Extending the scheme for integrated textile parks (SITP) further, the Ministry of Textiles
has now set a target of sanctioning 25 such parks under the scheme by March 2011. The
ministry has already received around 32 proposals for integrated textile parks from across
the country, including two from Gujarat.

"Out of the 40 parks sanctioned under the SITP, as on date 25 parks are operational,
while the rest will be operational by next year. Our government has extended this scheme
wherein we aim to sanction at least 25 new such parks by March 2011. Moreover, the
government has also introduced integrated skill development scheme with a dedicated
budget of Rs 229 crore," said Panabaaka Lakhsmi, union minister of state for textiles,
Government of India here on Thursday.

Under the SITP scheme, the Centre provides one time financial assistance of 40 per cent
of the project cost (upto Rs 40 crore) for each integrated textile park. All sub-sectors of
textile industries namely ginning, spinning, texturising, weaving, knitting, processing and
garmenting, among other ancillaries, are eligible to avail the benefit. Under the scheme,
entire range of common infrastructure including road, water supply, effluent treatment,
captive power plant, training facilities, testing labs and factory buildings owned by
special purpose vehicles (SPVs) set up by park user units are entitled for subsidy.

The central government has sanctioned 40 parks all over India in the past, out of which
seven parks are functioning successfully in Gujarat. So far, Rs 4,133 crore worth projects
have been approved under SITP and grant of Rs 1,419 crore have been sanctioned.
According to V Srinivas, joint secretary, Ministry of Textiles, on full completion of the
40 integrated textile parks across nine states, additional investment of Rs 15,000 crore
and creation of over five lakh jobs is likely to be seen by next year. "Total loans
sanctioned by banks so far for infrastructure alone has been Rs 15 crore. On our part, the
extended SITP will give special preference to proposals that have 100 acres of land and
theme-based parks," Srinivas added.

The seven textile parks sanctioned in Gujarat include Gujarat Eco Textile Park in Palsana
in Surat, Vraj Integrated Textile Park at Bareja in Ahmedabad, Surat Super Yarn Park at

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Mangrol in Surat, Fairdeal Textile Park at Kosamba in Surat, Mundra SEZ Textile &
Apparel Park in Kutch, Sayana Textile Park at Icchapore in Surat and RJD Integrated
Textile Park at Icchapore in Surat.

5) Textile sector leads employment surge in July-September

The Hindu Business Line, December 5, 2010
Our Bureau, New Delhi

Yogesh, a 33-year-old worker at the dyeing unit of home textile exporter Weavetex
Overseas' manufacturing facility at Khekra on the outskirts of Delhi, has been drafted
back into his old job after a lay-off of well over a year. Progressively improving orders
from its US customers, including JC Penney and Pier 1 Imports Inc., coupled with a more
stable outlook in the medium-term, has prompted the textile exporter to re-induct workers
such as Yogesh.

Corroborating the trend, the latest employment estimates compiled by the Government
show a sharp upsurge in overall hiring in key manufacturing and service sectors. The
textiles sector, which has consistently seen workers being laid-offs over the last 12
months, has bounced back and leads the hiring trend during the latest quarter.

According to the Labour Bureau's latest quick employment survey for the July-September
quarter, overall employment is up nearly three folds at 4.35 lakh, the highest quarterly
increase recorded during the current calendar year. Significantly, the direct workers —
including permanent, temporary and casual workers employed directly by the employer
against contract workers hired through a contractor for a period of time — accounted for
90 per cent of the new hiring during the September quarter, signalling a sharply buoyant
medium-to-long term outlook among entrepreneurs.

Field work for the latest survey, which is the eighth in the series, was launched in
October and covers 2,558 units across eight manufacturing sectors nationwide. The
Labour Bureau's surveys since the beginning of the year show that the overall hiring of
workers has been progressively on the rise, from a 0.61-lakh cumulative increase reported
in the January-March period to 1.62 lakh in the June quarter and to 4.35 lakh in the latest
survey — the highest since the 6.38-lakh quarterly increase in employment in the quarter
ended December 2009.

anil@thehindu.co.in

6) India could exit world cotton market

The Economic Times, December 6, 2010
Nidhi Nath Srinivas

THEREare only two questions worrying the Indian cotton market right now. Will
exporters get bonus time to complete existing contracts? Will others get a chance to
muscle in? But at the bottom of it is something more fundamental: will India continue to
export cotton this season? I’d say don’t bet on it.

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Look at the time line. The last date for shipments is December 15. Exporters get three
weeks after that to submit their shipping documents to the textile ministry. That takes us
to January 5.

No one has a clue what will be the crop size at that time. Arrivals were significantly
lower than last in November and December. The 2 lakh bales expected daily petered to
60,000. Gujarat and Andhra cotton harvest is spoilt by incessant rain, with high moisture,
yellow colour and pest attacks. The old crop estimates of anything from 32 million bales
to 35 million bales are clearly irrelevant. The crop may ultimately be closer to 30 million
bales. So a meeting of the Cotton Advisory Board will have to be called to again do the
supply and demand numbers and discover a surplus, if any.

If CAB does indeed find a surplus this season, the textile ministry would again have to
seek Cabinet approval for exports. Till now they have permission to only register up to
5.5 million bales, which they did. After that, shipped or nod, they need another nod from
other ministries. That takes us to the third week of January — the earliest you can expect
an answer to whether India will continue exporting cotton. No matter what industry
representatives and lobbysists may want to believe.

While the government figures out the larger picture, those who have not been able to
fulfill their export contracts are feeling ill used and want a second chance. Who knew it
would rain so much on their parade and delay the harvest so much. It can be quite
aggravating to see the fattest profit opportunity in a decade slip out of your hands. But
those who were not able to register any contract at all when the window was open are
feeling even more aggrieved. They want these ‘non-performers’ to be booted out and the
unshipped quantities be offered to a different set of exporters.

For now they have the commerce ministry on their side. A cry has gone up to mete out
‘exemplary’ punishment to the laggards. Luckily, it’s never easy for the government to
hand out punishment. The Director General of Foreign Trade believes it is for the textiles
ministry to act the bad cop. But the textile ministry is not that keen on changing the rules
of game mid-way and making itself vulnerable to challenge from exporters.

There is another reason too. The textile ministry is currently holding road shows across
the country for its integrated textile parks scheme where it hopes to attract dozens of
investors — Indian and foreign. It would be difficult for potential investors to trust a
ministry that takes pleasure in penalizing large companies. You can expect a meeting
between commerce and textile ministry this week to decide on ‘punishment’.

The smart thing would be to forget about penalizing exporters. And forget about exports
as well. It is a pity rain played spoilsport for cotton exporters. But they have had their
chance. The government allowed them to go ahead and export, braving the fury and
protest from domestic spinners and weavers. Now in all fairness it is time the domestic
industry got reasonably sufficient quantities of raw material, without the constant threat
of shipments hanging over their heads.

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And farmers won’t be hurt either. If the crop is indeed low, and the CAB will check on
that, then they are holding a golden egg. Most have sold off their crop any way because it
has low shelf life this season. If the harvest improves and a genuine surplus re-emerges,
exports can always be resumed. Of course India’s exit will drive the world cotton market
ballistic. The ban on cotton yarn has already kicked up world prices. By barring free trade
of the physical commodity, India is exporting textile inflation to cool its own WPI index.
And it may seem a complete waste of opportunity to Indian spinners and traders. Their
only consolation is that in government and in business, nothing is forever.
nidhi.srinivas@timesgroup.com

7) Backward integration best option for textile industry

The Economic Times, December 10, 2010
S Sujatha & Sutanuka Ghosal COIMBATORE | KOLKATA

BACKWARD integration and consolidation have become crucial to the growth of textile
industry as uncertainty in raw material availability and cost has been increasing. Only
those who were ahead of the curve and hedged their risks may live to tell the tale.

While assured quality, timely delivery and savings on transportation costs are clearly the
top three advantages in having a vertically integrated operation, today the availability of
raw material has turned out to be a crucial benefit for such companies.

“In the last year or so, the yarn prices increased and the spinners have made good
profits,” said Amit Gugnani, associate vice president at Technopak Advisors, a
management consulting firm. “Most large companies today understand that price offering
to the customers can be controlled better by vertically integrated operations than being
stand alone apparel manufacturers. It helps them control the costs at various points of the
supply chain and maintain a reasonable level of profits while meeting price expectations
of the customers.” Few years ago, around 20 companies in Tirupur including the
country’s leading knitwear exporters Eastman Exports Global Clothing and KPR Knits
opted for backward integration and invested in spinning mills and processing plants,
while many including Tirupur Exporters’ Association president A Sakthivel’s Poppys
Knitwear went for processing facility alone.

Coimbatore-based 800-crore KPR Mills, which opted for backward integration and
started four spinning mills alongside its knitwear units, is today comfortable in its raw
material position as it produces nearly three times more than its cotton yarn requirement.
“It is always advantageous to have vertically integrated operations as the supply chain is
complete. We only need to buy cotton and it goes out as a value-added product. Whereas
in separate businesses of spinning, dyeing and garmenting, there will always be ups and
downs and we may have to face difficulties during certain periods and few products
might go out of market,” said 1,000-crore Eastman Exports Global Clothing’s chairman
and managing director N Chandran.

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Further, he said that the company can be flexible with the order quantity as it need not
outsource any work that might require a minimum quantity. “Buyers can also believe in
timely delivery of orders as fabric will come out as garment from one place,” he added.

Recently, hosiery major Dollar Industries has acquired a spinning mill in Tamil Nadu at
an investment of 65 crore as part of its backward integration move. The company has also
acquired a processing unit at an investment of 10 crore. Vinod K Gupta, managing
director of Dollar Industries, said: “Owning a spinning mill will help us save a VAT of
4% on cotton yarn, which we paid till date as we did not have any spinning facility.”

Cotton output in India may miss estimate

Cotton output in India may miss an earlier estimate because of unseasonal rainfall in the
main producing regions, a textile mills group said. Output in the year started October 1
may be 29.5 million to 30 million bales of 170 kg each, compared with 32.5 million bales
estimated by Cotton Advisory Board, said DK Nair, secretary general of the
Confederation of Indian Textiles Industry.

8) Cotton output likely to be around 325 lakh bales

Business Standard, December 14, 2010
Press Trust of India / Mumbai

Cotton output in India this year is expected to be around 325-lakh bales, a senior
government official said today.

"I am sure that it will not be less than 325-lakh bales," Textile Commissioner, A B Joshi,
said at a FICCI-organised event on sports textiles here.

Concerns have been expressed in the past few months about cotton production in the
country likely to get affected following unseasonal rains.

"Yes, rains had a damaging effect on cotton output, especially in regions like Andhra
Pradesh which was hit by cyclonic showers. But as a counter, production from other
pockets like Maharashtra has been very high and rains have in fact, helped increase the
output," Joshi said, indicating that it is a mixed-bag sort of situation.

The Cotton Advisory Board (CAB) had made a prediction in August that production
could be around 325-lakh bales.

Various industry bodies have given different estimates ranging from 300-lakh bales to
350-lakh bales, indicating divergent views on the impact of the rains on cotton
production.

The CAB's prediction is generally very sound and historically it has not gone wrong, the
Textile Commissioner said, adding a review of the estimate will be done at a CAB
meeting to be held shortly.

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The cotton crop in India is sown in June-July and its harvesting is done in September.

The crop starts hitting the market from October onwards.

9) Cotton output likely to be around 325 lakh bales

Business Standard, December 14, 2010
Press Trust of India / Mumbai

Cotton output in India this year is expected to be around 325-lakh bales, a senior
government official said today.

"I am sure that it will not be less than 325-lakh bales," Textile Commissioner, A B Joshi,
said at a FICCI-organised event on sports textiles here.

Concerns have been expressed in the past few months about cotton production in the
country likely to get affected following unseasonal rains.

"Yes, rains had a damaging effect on cotton output, especially in regions like Andhra
Pradesh which was hit by cyclonic showers. But as a counter, production from other
pockets like Maharashtra has been very high and rains have in fact, helped increase the
output," Joshi said, indicating that it is a mixed-bag sort of situation.

The Cotton Advisory Board (CAB) had made a prediction in August that production
could be around 325-lakh bales.

Various industry bodies have given different estimates ranging from 300-lakh bales to
350-lakh bales, indicating divergent views on the impact of the rains on cotton
production.

The CAB's prediction is generally very sound and historically it has not gone wrong, the
Textile Commissioner said, adding a review of the estimate will be done at a CAB
meeting to be held shortly.

The cotton crop in India is sown in June-July and its harvesting is done in September.

The crop starts hitting the market from October onwards.

10) ‘Textile industry not getting due attention'

The Hindu business Line, December 18, 2010
Our Bureau, Coimbatore

The Chairman of the Textiles Committee, Ministry of Textiles, Government of India, Mr

T. Kannan, today observed that textiles had gone out of the Tamil Nadu Government's
radar. “Nearly 22-23 per cent of the State GDSP (Gross Domestic State Product) is from
spinning, yet the textile industry is not getting its due attention from the State

9
Government,” he said. He was in the city at the sixth edition of TexFair, an event
organised by the Southern India Mills Association (SIMA).

Delivering the presidential address, Mr Kannan said that while States such as Andhra
Pradesh, Karnataka, West Bengal and even Bihar continued to invite investments in
textiles, the Tamil Nadu Government remained mute spectator to the developments.

Bull-run likely

He pointed out that with China cutting textile production, the Indian textile industry could
be in for a bull-run. “The domestic demand for textiles is already robust,” he said,
referring to a household survey on consumption of textiles, conducted by the Textile
Committee.

The survey, he said, signalled a sharp increase in consumption of textiles from the second
quarter of 2009 till the quarter ended March 2010.

Stating that the State could play a big role in shaping a stable textile policy, the Textile
Committee Chairman said it would be unfair to expect that cotton be marketed at
international prices while demanding that yarn be subsidised.

He urged the apex body of textile mills to encourage innovators and promote research
initiatives. The association should start funding innovation and research and the Textile
Committee would support such proposals, Mr Kannan added.

Offering felicitation at the inaugural function of TexFair 2010, Mr Diven G. Dembla,

Treasurer, Indian Textile Accessories and Machinery Manufacturers' Association, said
the total estimated production of textile machinery, parts and accessories during 2009-10
increased by 4 per cent to Rs 4,245 crore against Rs 4,063 crore in 2008-09. The imports
have dipped to Rs 5,806 crore in 2009-10 from Rs 6,500 crore the previous fiscal.

Stressing the need for a comprehensive raw material security policy, SIMA Chairman,
Mr J. Thulasidharan, said the hasty policies relating to cotton and cotton yarn exports
caused considerable damage to the industry in the recent past and would in all likelihood
continue till the end of this fiscal.

He said there was surplus yarn for the domestic sector and the issue was only price,
referring to export of cotton yarn. “It is unfair to pressure the spinning sector to subsidise
the downstream sectors,” he said and urged the powers-that-be to take a holistic, rather
than a sectoral, approach.

He pointed out that all other sectors except spinning failed to provide any data to the
office of the Textile Commissioner. “ In the absence of correct data, estimates can go
wrong and this in turn would result in speculation in the cotton and yarn markets,” he
added.

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11) Apparel exports up over 1% in October
Business Standard, December 21, 2010
Press Trust of India / New Delhi

Maintaining a positive trend, India's apparel exports registered a modest year-on-year

growth of 1.5 per cent to $728 million in October 2010, even though demand from
western markets remained lacklustre.

India's garment exports stood at $717 million in the same period last year, according to
Apparel Export Promotion Council (AEPC) data.

"The trend was negative in the first few months of this fiscal. Although the rate of decline
has reduced now, demand is yet to pick up from European and the US markets," AEPC
Chairman Premal Udani said.

The US and EU together account for about 80 per cent of the country's total apparel
exports.

India's apparel exports were on the decline till July this fiscal. However, they have
exhibited positive growth since August.

However, cumulative exports during the April-October period amounted to just $5.7
billion, about 6 per cent lower in comparison to the corresponding period last year.

The apparel industry provides employment to about seven million people in the country,
out of which almost half are engaged in the export sector.

The Textiles Ministry has set a $12 billion apparel export target for the current fiscal.

12) Govt ups FY11 handicrafts export target to $2.5 bn

Business Standard, December 22, 2010
Press Trust of India / New Delhi

The government has revised the handicrafts export target upwards to $2.5 billion from
$2.2 billion for the current fiscal on account of increasing demand from western markets
like the US and Europe.

The handicrafts export performance was excellent in the first two quarters as exporters
surpassed the target of $990 million and touched the figure of $1.02 billion. The target
has now been revised upwards to $2.5 billion from $2.2 billion for 2010-11, Textiles
Minister Dayanidhi Maran said here.

"I hope that quarter 1 and 2 growth will repeat the success story and achieve much higher
exports than the targets fixed," he said at an award function organised by the Export
Promotion Council for Handicrafts (EPCH) here.

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During April-November 2010-11, the exports went up by 25 per cent to $1.13 billion
from $912 billion, according to the official data.

Besides increasing demand from western markets like the US and Europe, exporters are
getting good number of orders from new markets like Argentina, Latin America and the
Middle East, EPCH Executive Director Rakesh Kumar said.

The US and EU together account for 70 per cent of the handicraft exports.

The exports were hit hard due to the global economic slowdown. After 11 months of
contraction, exports from the handicrafts sector, which employs 1 million people, turned
positive from September 2009.

To promote the sector, Maran said, the EPCH has been entrusted with two projects -- the
resource centre for providing design development at Moradabad and international Lace
Trade Centre at Narsapur.

The projects, which would involve an expenditure of Rs 20 crore, are part of Handicrafts
Mega Clusters being set up at Moradabad and Narsapur.

Moradabad, Jaipur, Saharanpur and Jodhpur are major handicraft hubs in the country
catering to the global markets.

Besides, the government also plans to create 25 new theme based clusters covering five
products groups for non-traditional products like needle work, fashion accessories, festive
decorations and natural fibre for exports, the Secretary in the Textiles Ministry, Rita
Menon, said.

13) As cotton gets pricey, textile firms turn to polyester

The Hindu Business Line, December 26, 2010
Mumbai

With the sharp rise in cotton prices, textile manufacturers have shifted their focus to
ramping up polyester yarn production capacity.

Alok Industries, a leading integrated textile company, plans to double its polyester yarn
capacity to 1,200 tonnes a day by March at an investment of Rs 800 crore.

Mr Sunil O. Khandelwal, Chief Financial Officer, said the company had foreseen the
shortage of natural fibre cotton and would begin increasing polyester yarn production
from next month.

Similarly, Ganesh Polytex, which produces polyester staple fibre by recycling plastic pet
bottles, plans to increase its processing capacity by 15,000 tonnes to 72,000 tpa. As part
of its forward integration plans, the company is also putting up 25,000 spindles to

12
produce polyester yarn at its existing Bilaspur plant in Chhattisgarh. This will involve an
investment of Rs 125 crore.

Mr Gopal Agarwal, Chief Financial Officer, said Ganesh Polytex would tap the Centre-
sponsored Technology Upgradation Fund (TUF) scheme for the spindles.

The price gap between cotton and polyester yarn has widened in the last few months with
demand for the former increasing substantially on the back of a lower-than-expected crop
this season, said Mr Khandelwal. Cotton yarn of 40s counts currently trades at Rs 260 a
kg while polyester yarn of 80-denier is priced at Rs 110-115 a kg. Cotton prices are
expected to stabilise by mid-January with arrivals improving. The most popular variety,
Shankar-6, may fall from Rs 41,000 to Rs 37,000-38,000 a candy as supply improves.

More than the fall in production, the uncertain Government policy on cotton has made it
difficult for companies to plan their future, said an analyst. The textile industry's shift to
polyester has pushed up the prices of the key raw material, PTMEG (poly tetra methylene
ether glycol), but this has been moderate compared to cotton, he said.

The fall in cotton production over the years has pushed up use of polyester by the textile
sector. In the last decade, this has nearly doubled from 30 per cent to 55 per cent and
expected to further increase to 70 per cent in the next five years, said Mr Khandelwal.

On the quality issue, he added, a fabric with 75 per cent polyester and 25 per cent cotton
is considered a good blend given the price advantage. A shirt made of 100 per cent cotton
would cost about Rs 600 while that in polyester Rs 350-400.

14) Cotton prices weave woes for ind, rich harvest for farmers
Business Standard, December 27, 2010
Press Trust of India / New Delhi

High cotton prices spun out enough problems for India's $62 billion textiles industry, but
weaved gains for growers and traders in 2010.

Amidst pulls and pressures from the conflicting interests, a ministers' group under the
guidance of Finance Minister Pranab Mukherjee kept reviewing the price and crop
situation, with excessive winter rains playing spoilsport.

The textiles industry pulled out all stops to lobby with the textiles, commerce and finance
ministries seeking a ban on cotton exports.

But Agriculture Minister Sharad Pawar had a different take -- hardening of cotton prices
in the global market is a God-send opportunity for the farmers. Why not allow them to
avail of it at least till February, Pawar argued.

Collective ministerial wisdom seems to have prevailed and a middle path was chosen to
allow exports up to 5.5 million bales.

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Prices shot up in the international market because of the demand-supply imbalance,
driven mainly by increasing consumption in China and poor harvests in Pakistan due to
floods.

The global trend was reflected in the local 'kapas mandis' as well. The natural fibre, the
raw material for 60 per cent of the 35 million people industry, has remained in short
supply since April, but prices shot up by 90 per cent in the last five months. A cotton
candy (356 kg each) was sold at an all-time high of Rs 45,000 in October in the domestic
market, according to industry officials.

The government intervened by way of capping cotton exports at 5.5 million bales and
cotton yarn at 720 million kg. But it did not help cool prices.

"The capping has not helped the domestic textiles sector much in the backdrop of soaring
international cotton prices. It has encouraged speculation by traders and creation of
artificial scarcity," ratings agency Fitch has said.

The industry found everything wrong with the policy of allowing exports and the apparel
units even downed shutters in protest on November 19.

However, it described the developments as good for farmers, many of whom have
switched to the genetically modified Bt Cotton variety.

"The year was exceedingly good for farmers, whose production cost had already declined
substantially because of the use of Bt Cotton seeds," Confederation of Indian Textiles
Industry (CITI) Director General D K Nair said.

Within the industry, garment-makers and exporters bore the brunt of the hit, while the
overall trend was helped by a global revival of demand in 2010 after a troublesome 2009.

Total textiles exports managed to grow by 11.5 per cent to $7.57 billion year-on-year
during the April-July period of the 2010-11 fiscal, supported by a pick-up in demand in
Western markets, where the bulk of the consignments are shipped.

Exports contribute a little over one-third of the total revenue of the textiles industry. The
Textiles Ministry had fixed a $25 billion target for the 2010-11 period, compared to
$22.41 billion in the last fiscal.

Garment exporters, who contribute about half of the total textiles exports, continued to
face a demand slump.

Apparel exports declined by an annualised 6 per cent to $5.75 billion between April-July.
However, things seem to have been improving since August.

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"In the first few months of the current fiscal, the trend was negative mainly due to less
number of orders from our traditional markets. Although the rate of decline has reduced
now, the demand is yet to pick up," Apparel Export Promotion Council Chairman Premal
Udani said.

Despite the problem of high raw material costs, total textiles production rose by 10 per
cent to about 70,000 million square metres in 2010 compared to the last year.

As per the estimates of the Textiles Ministry, cotton production in 2010-11 is likely to be
325 lakh bales.

But it remains to be seen whether production can reach this figure in the wake of excess
winter rains in the key growing areas of Maharashtra and Gujarat.

15) Manmade fibre exports likely to fall

Business Standard, December 29, 2010
BS Reporter / Mumbai

After rising for five consecutive years, exports of man-made fibre (MMF) are likely to
fall in the current financial year.

Slow recovery in the US and European countries, coupled with rising raw-material costs
and an appreciating rupee, is exerting pressure on MMF exports. The industry estimates
that the government’s export target of $3.7 billion will be missed by around $300 million
in 2010-11.

During the first quarter of the current financial year, MMF exports had seen a marginal
decline of one per cent year-on-year, which aggravated to 30 per cent in the second
quarter.

Vinod K Ladia, chairman of the Synthetic & Rayon Textiles Export Promotional Council
(Srtepc), said, “The current quarter (October-December), too, is showing similar
downtrend. Amid such situation, our exports will fall short by $300 million in FY11 to
achieve the target.”

Fabric has been the most-hit segment, with exports dipping 22 per cent and 33 per cent in
the June and September quarters, respectively. Yarn exports declined 19 per cent in the
second quarter, while made-ups were down 33 per cent. Fibre exports also plunged 22 per
cent year-on-year.

Ladia said reduction in duty drawback rates and appreciation in the rupee against the
dollar were making India uncompetitive in the global market.

The council in this regard is seeking government’s intervention in stabilising fibre and
yarn prices and to ensure its availability. Polyester yarn prices have risen 40 per cent

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since October this year, according to the council. The trade body has also sought an
increase in the duty drawback rates for 2010-11.

The government plans to increase synthetic exports to $7 billion by 2013-14.

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