NOIDA: Neeraj Bhasin's basement factory outside New Delhi is dark and dingy, but there's just enough light to see the dust that has accumulated
on the order catalogues sitting on his desk.
At one time Bhasin's 22-year-old textile export company, Eastern Connexion Exports, received regular orders for home furnishings from France, Spain and Scandinavia.
But the economic meltdown in the major export markets of Europe and the US has led to a substantial fall in foreign orders and could be the final nail in the coffin for many of India's small- and medium-sized textile houses.
Now the colourful organza curtains, floor cushions and quilt covers that were once produced in bulk sit in boxes and are piled high on tables as the company's profits have steadily shrunk.
The global financial crisis is more grim news for India's second-largest industry, which has already seen 700,000 workers laid off and is set to shed another 500,000 jobs in the next five months, industry and government figures show.
The textile sector employs almost 38 million workers and accounts for 8 per cent of India's GDP.
In 2007-08 it was worth 22 billion dollars, but even before demand in the US and Europe started falling, the high value of the rupee and a spike in the cost of raw materials left textile exports more vulnerable than other sectors.
Industry representatives responded coolly to a government stimulus package announced in December, which included a 4 per cent cut in value-added tax aimed at bringing textile prices down.
They said such packages would do little to stem the decline in demand in major export markets caused by the economic slowdown.
"This doesn't really get addressed by any new investment," said Subir Gokarn, chief economist of Standard and Poor's Asia-Pacific division.
New economic packages help companies see through the recession by allowing them to hold on to cash they already have or by injecting short-term liquidity, said Gokarn.
"That's some relief but it's not going to make up for the fact that markets are in very sluggish conditions," he said.
Source : The Economic Times