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Surat's Rs 20,000 crore textile sector is spinning out a sorry yarn, overproduction and shrinking margins might soon trigger a shake-out,reports CNBC-TV18.
Surat has always spun good yarn and found ready customers.Each day it spins 2.5 crore metres of nylon, polyester and other synthetic fabric and sells it in semi-urban and rural areas all over India.
Lack of innovation & specialisation is dragging Surat's textile industry.More people have entered the industry and nobody has diversifed or specialised. Too many people did the same thing, overproduction skyrocketed and margins shrank.They were 5% last year and now they are 2%. That has brought on fear.
"As far as the production is concerned, we feel that 20-25 % of units will close down, if the same situation continues. That might be a possibility," said Paresh Patel of Patel Knitting Company.
Surat's textile industry is too crowded; some units may shut down.Surat already has 6.5 lakh power looms, 500 dyeing units and 5,000 embroidery machines. According to industry watchers, the industry has not focused on its strengths.
"Synthetics world over have next class available but unfortunately, Surat is not prepared for it in terms of knowledge. We are forgetting that textile is a knowledge driven industry and we are still in that experience driven mode," said Girish Luthra,Director of Luthra Dyeing & Printing mills.
Industry sources say that it's true that Surat faces no competition from other Indian cities. But it will be a different story, when China enters the global market after 2007. A story that might turn even more tragic.
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