Gujarat’s chemical and textile industries continue to be shaken by the recession in Europe and the US. These labour-intensive businesses are being overcast by the threat of job losses according to media reports.
Low demand, declining working capital, high input prices, and prolonged payment cycles have all contributed to a bad debt cycle that has compelled businesses to make cost reductions.
About 70 lakh people in Gujarat are employed directly and indirectly by the textile industry, while 5 lakh people are employed directly and another 15 lakh are employed indirectly by the chemical sector. According to industry experts, new categories are performing well while more traditional units are experiencing a problem.
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The apparel and textiles industry has suffered from a fall in demand from global markets as well as a decline in domestic demand since consumers are more careful with their discretionary spending owing to inflation.
This has had repercussions all the way up the textile value chain. Gujarat also has significant manufacturing enclaves for intermediates and dyes.
The decline in the textile industry has decreased demand for chemicals and dyes. The demand for their exports has also decreased as a result of Europe’s textile industry cutting back on production as petrol prices rise and demand remains subdued.
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