Textile units in Surat struggling to revive from sluggish demand

Textile units in Surat, India’s biggest man-made fabric hub, are struggling to revive from the current crisis of sluggish demand despite the onset of the festive season.

Though textile units witnessed some spurt in demand ahead of Gujarat’s nine-day Navratri festivities which commenced on Monday, this is not enough to clear existing stock. Apart from subdued demand, units functioning at every stage of textile value chain in Surat are facing challenges of increased input cost, said Dev Kishan Mangani, former president of Surat Textile Traders Association (STTA), adding, “Inquiries from across the country have started pouring in, but hardly 25-30% are being translated into actual buying. In most of the cases, sellers and buyers are not agreeing on prices and hence business is not happening.”

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Production cost has gone up drastically, making it difficult for Surat-based units to supply fabrics at lower prices, laments Mangani, who is also chairman of South Gujarat Chamber of Commerce and Industry’s (SGCCI) textile committee. Textile traders are hoping to reduce existing stock by 60-70 % by the end of Navratri as new orders have come from eastern parts of the country, especially from Bengal, Assam and Odisha, he added.

“Compared to last Diwali, there is hardly 50-60% demand this year so far. Buyers want newly designed fabric and hence most of the textile units are struggling to clear inventories. Margins of weavers have also reduced due to increased input cost,” said Ashok Jirawala, President, Federation of Gujarat Weavers Welfare Association (FOGWWA). Jirawala says that over the past couple of months there has been a marginal increase in demand, but not enough to run weaving units at full capacity.

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Plight of processing units is even worse as most of the processors are functioning five days a week even during the ongoing festive season. As traders are not able to generate adequate business, processing units are also not getting jobs and hence they have no option but to shut their units twice a week, said Jitendra Vakharia, president of South Gujarat Textile Processors Association (SGTPA). Besides lower demand, processing units are also facing challenges of increased prices of coal and chemicals, said Vakharia, adding that in the past 10 days coal prices have jumped by 10%.

The Rs 80,000 crore Surat textile industry produces over 40 million meters of fabric on a daily basis. The cluster is housing more 7.50 lakh power looms and over 400 processing units.