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Cash Crunch & Inflationary Pressure Hit Rural Textile Consumption in Surat

Rural offtake of textiles from Surat, the hub of man-made fabrics, has been impacted by inflationary pressure and a lack of cash in hand. According to traders, rural marriage season demand is down 50% year on year.

Shivam Dwivedi
Retailers in rural areas are not stocking up because demand from villages is very low
Retailers in rural areas are not stocking up because demand from villages is very low

The wedding season, which began in mid-November of last year, will last until mid-March of this year. Surat's textile industry produces approximately 45 million metres of fabric per day. "Of the total daily production, we are able to sell 2-2.5 crore (20-25 million) metres during the marriage season.

"The weaving units are experiencing difficulties and have been forced to reduce working days from six to four in order to prevent inventory from piling up," said Ashok Jirawala, president of the Federation of Gujarat Weavers Welfare Association.

Retailers in rural areas are not stocking up because demand from villages is very low, according to traders. The decline in demand has forced Surat's weaving units to reduce working days in order to keep inventory from piling up. Surat has 55,000 weaving units and 850,000 weaving machines, employing approximately 750,000 people.

"The domestic market has slowed as it recovers from overconsumption and higher sales in the previous year," said Vivek Merchant, Swan Energy's head of the textile division. "The usual pre- and post-Diwali increase in demand was missing in 2022. Unprecedented increases in cotton prices had a negative impact on the segment. Things should improve now that prices have returned to normal. Due to inflation, demand from rural India has also slowed," he added.

Textile manufacturers reported a drop in retail demand, primarily from rural India, resulting in wholesalers not purchasing dyed fabric and other textile items such as sarees and garments from them. "The price of fabric has also come down due to lesser demand. Wholesaler offtake is lower because wholesalers are waiting for prices to fall further," said Champalal Bothra, general secretary of the Federation of Surat Textile Traders Association.

A healthy harvest season, better minimum support prices for crops, and increased government spending in rural India ahead of the 2024 general election, according to Merchant, should lead to growth in the rural consumer segment.

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