20 textile processing units in South Gujarat have closed

The textile dyeing and printing businesses that shut down had a daily output capacity of 1 lakh metres and monthly revenue of Rs 5 crore.

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 due to declining demand for their products.

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 Rs 5 crore.

No shutdown has been recorded in Ahmedabad, though, where there is a collection of about 110 textile production facilities. However, the units in Ahmedabad are significantly scaling back on their operations.

Over the previous few months, at least 20 textile processing facilities have shut down. They were major figures. These businesses generated monthly revenue of Rs 5 crore.

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 principal product that Surat exports to India, the sari, has seen a significant decline in demand. Even the operating units are up against fierce rivalry, and they hardly ever turn a profit.

The units have scaled back their operations in Ahmedabad in the meantime. Both in the domestic and global markets, demand has decreased. As a result, textile processing facilities—which typically handle outsourced tasks from other textile mills—have closed. The capacity utilisation in some facilities has fallen to 30% in the last month due to a lack of orders. While there are no new orders, units mostly function by satisfying orders from the past.

Grey fabric costs have collapsed as cotton prices remain erratic. Because orders at reduced prices may result in losses, many units are refusing to accept them as this is affecting the profitability of firms.

News source: The Times of India