Rajesh Mittal
Director Cedaar Textile Private Limited
FTA with UK would be beneficial to textile & garment sector
Cedaar Textile offers the widest range of melange yarns, solid top dyed yarns, and grey fancy yarns in cotton, polyester, acrylic, viscose, Tencel, Modal and other fibres. The India-based company offers all yarns with sustainability as prime focus in 100 per cent organic, recycled fibres (polyester & cotton) for green environment and conservation of natural resources. In a chat with Fibre2Fashion, Cedaar Textile Director Rajesh Mittal talks about the demand for yarn in India and global markets.
How would you describe the state of the global and domestic yarn market at the moment?
Global Demand is very slow due to multiple factors. The Russia-Ukraine war has led to worldwide weak sentiments. There have been disruptions in supply chain due to extended COVID-19 related lockdowns in China. Moreover, high inflation in the US and Europe, the surge in food prices and energy cost has led to reduced purchasing power at consumer end. Higher inventory at stores is leading to a slowdown in demand. The US Federal Bank raised interest rate to curb inflation. There is increased risk of recession due to the rising inflation. As a result of all these factors, the demand for garments and yarn worldwide has dropped significantly. The global slowing down of demand has also impacted the domestic yarn market and there is too much pressure on the industry. Several mills have decreased their production by 30-40 per cent in order to cope with the present situation and to curb losses. The prices of cotton fibre have declined significantly in the last five months and with the arrival of the new crop, prices are expected to drop further to a sustainable level. This may result in revival of demand in the domestic market, and we expect the situation to improve for the industry as a whole.
When do you expect the prices to stabilise and the demand to return to normal?
It is unpredictable as the above-mentioned factors will play a vital role. Most experts predict that there are high chances of the US and Europe entering into recession in the next few months. But most frontline garment brands are waiting for Thanksgiving and Christmas sale to understand consumer demand and flow of orders to make further strategy. In general, it appears that full-fledged demand may take longer time to return, may be by June 2023.
What factors are responsible for the shift in the price dynamics?
Raw cotton prices have fallen by approximately 30 per cent in the last five months (as of November 16). International cotton prices have also weakened due to sluggish demand. Crude oil prices have decreased by 20-25 per cent in the last five months. Owing to lower fibre prices, yarn prices are likely to be more competitive, and demand is expected to improve in the coming months.
Which are your major markets in India and abroad?
In India, our yarn is sold in Ludhiana, Delhi, Kanpur, Bhilwara, Mumbai, Tiruppur and also to corporate customers. Outside India, we export to Bangladesh, Egypt, Sri Lanka, South Korea, Portugal, Italy, South Africa and Latin American countries.
Which types of yarns are currently more in demand? Why?
At present synthetic and synthetic blended yarns like 100 per cent polyester, poly-cotton and poly-viscose blends are more in demand due to their lower price. However, the price of raw cotton is softening and is expected to stabilise in the next 1-2 months. We hope the demand for 100 per cent cotton and cotton rich blends to pick up in the domestic market in the coming months after price correction. This will reduce the current unprecedented demand of synthetic yarns to normal levels.
What new innovations and technologies are you investing in?
At Cedaar Textile, we are planning to increase our capacities in fibre and yarn dyed, knitted grey fabric, dyeing & finishing, and knitted and woven garments in the next 1-2 years to diversify from purely yarn manufacturer and forward integrate into production of fabric and garments.
How do you incorporate sustainability into your operations and products?
We are moving towards energy conservation by replacing old machinery with new and upgraded versions. We are also putting up solar plant and improving productivity and process automation. We are expecting 20-25 per cent energy saving after full implementation of these projects. In our current production, we are using 35-40 per cent of sustainable fibres like PET, bottle recycled polyester, organic cotton, and recycled cotton to produce sustainable yarns.
What kind of government support can benefit the textile manufacturing sector in India?
Several countries are adopting ‘China plus one’ strategy for buying. This is a good opportunity for India for multi-fold increase in its textile sector infrastructure, especially in specialised and technical fabrics and garments to provide an alternative to China for supplying fabrics and garments at a large scale. In order to achieve this, 360° expansion is required. This includes creation of large textile parks or free trade zones (FTZs). Further, government support and a long-term strategy for the next 15 years is required. Incentives at par with China need to be given to the industry to encourage entrepreneurs. The industry needs to be provided with long-term loans at very concessional interest rate, transportation and power subsidy, along with continuous training and skill upgradation. We need to study China’s overall incentive policy and frame a better policy for the next 15 years in order to achieve multi-fold expansion.
The Indian government is coming up with PLI 2 scheme which may pave the way in this direction to some extent. However, we need to work on a comprehensive policy for the next 15 years to achieve at least $120 billion export in the next 10 years from approximately $35-37 billion in 2022-23, which is lower than 2021-22 when export was $44 billion.
The Indian government is negotiating an FTA with the UK. How beneficial would it be to your business?
Currently, engineering goods, specialty chemicals, textiles and leather products are major exports to the UK. Once free trade agreement (FTA) is signed and implemented, India’s share of textiles in exports to the UK will increase. Currently, garment export from Bangladesh, Pakistan and Vietnam enjoys duty concession and duty-free imports in the UK. We are expecting good benefit to our company also because of the FTA as it would increase our yarn and garments business in the UK market.
For India too, the FTA will be a great opportunity to expand business in the UK, as it is expected to raise the value of bilateral trade to $100 billion by 2030.
What are the future plans at Cedaar? Any capacity expansions or new product launches?
As mentioned earlier, we are planning to expand our capacities in value added products like yarn dyed, knitted fabric dyeing and garments in the next 1-2 years. Our target is to achieve ₹1,000 crore turnover by end of 2027.
Published on: 02/12/2022
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
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