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Prospects for India's Man-Made Fibre Industry
published in Issue 61, 2nd quarter 2005
India has long been a textile producing nation and a major producer of raw cotton. The position of cotton, however, changed dramatically in the 1980s and 1990s with the growing use and falling prices of man-made fibres on the global sceneónotably polyester. These fibres became available on the market at prices which severely challenged the dominance of cotton, both for domestic usage and for export.
A number of factors lay behind this development. One was the economic slump in South-East Asia, which led to currency devaluation by a number of countries and cheaper exports of synthetic fibres. Second, surplus production capacity throughout the region gave rise to dumping, prompting importing countries to impose protective tariffs. India, because of its traditional dependence on cotton, has probably suffered more than most other Asian nations. But it has reacted in a positive manner. Investment is taking place in larger capital intensive plants in the form of backward integration into raw material manufacture. As a result, a number of smaller companies have either closed or been taken over.
Indiaís man-made fibre industry has grown to the point where it is larger than that of any other country in South Asia. Cotton, although still important, has now been almost overtaken by polyester staple and filament. Another significant development has been the widespread replacement of rayon by nylon in tyre manufacture.
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