Economic Times: March 10, 2017
Mumbai: India Ratings and Research maintained a stable outlook for cotton textiles for the next financial year, citing stable input prices, healthy capacity utilisation and steady domestic demand scenario.
India Ratings added that support emanating through fiscal incentives and implementation of Goods and Services Tax (GST) that will improve the textile industry’s export competitiveness and the United States' exit from the Trans-Pacific Partnership is likely to realign textile trade and investments towards the Indian subcontinent.
The rating agency expects cotton acreage to increase 10%-15% to nearly 120 million hectares in FY18, leading to increased production.
"A unified tax structure in the form of GST is likely to create a level playing field for the cotton and polyester industries, and promote enhanced sponsor interest towards the polyester chain," the report stated. It added that textile companies would be able to deleverage their balance sheets in fiscal 2018 in the absence of major investments due to adequate capacities and pending uncertainty over the GST tax rates.
India Ratings expects an improvement in the credit profiles of textile companies, including raw cotton players, driven by lower cotton inventories, limited capital investments and reduced borrowing costs.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.