Bangalore, February 11, 2022: India’s textile exports have been hit drastically due to the Sri Lankan economic crisis, leading to a 40 per cent year-on-year decline in business, including a 20 per cent decline in December alone, says the Tiruppur Exporters Association (TEA).
“Due to the war in Ukraine and the subsequent Sri Lankan crisis, we have seen a decline of 40 per cent in our business. All textile that would go out to Colombo now sits in warehouses as no one wants to buy them,” said Raja Shanmugham, president of the TEA.
In terms of exports, India had recorded the highest textile exports in FY22 (April, 2021 – March, 2022), reaching US$ 44.4 billion, according to the Textiles Ministry, with Union Minister Piyush Goyal saying he was confident of India achieving the US$ 100 billion target by 2030.
Ready-to-cut fabrics are largely exported from India to Sri Lanka, where garments are produced for export to other countries.
And since Sri Lanka has experienced the economic crisis in April last year, Shanmugham explained, importers in the country have stopped buying Indian fabric.
Chiran Prabash, Group Financial Controller of Nobleswear, a leading Sri Lankan importer of Indian Textiles said, “The economic crisis has not been kind on anyone in this country. We have stopped buying material from our Indian sellers as of now due to the high prices of textiles these companies offer. Our company has been relying on Chinese textile to meet the needs.”
He added that many other Sri Lankan companies which depended on India for their textile have either completely abandoned the Indian exports or have reduced their reliance on them owing to the cheaper material the Chinese market has started offering since early June last year.
Experts say that the COVID-hit global economy and the war in Ukraine have further dwindled the demand for garments in Europe, leading to a further stagnation of business for Indian exporters.
“Usually, Indian textiles find a market in South Asia as well as continental Europe. However, the Ukraine war has reduced demand for foreign raw material for the apparel industry. This means that Indian businesses are seeing a much lower export rate than usual,” said Roshan George, a keen observer of global economics based out of Chennai.
India, having established itself as an emerging market compared less developed global markets, has to pay higher duties that are imposed by the importing countries. Countries like Bangladesh, China and African countries get duty-free access to Sri Lankan markets and make India’s textiles comparatively less viable option in the international landscape.
Exporters initially believed that the Sri Lankan Crisis might have helped Indian businesses in the short term, as buyers from the US and Europe who were dependent on Sri Lankan apparel might have considered India as a reliable alternative, explained Shanmugham.
However, this failed to happen since the Sri Lankan government depreciated its currency in order to keep their market moving, thus further adding to the woes of Indian exporters.