India Loves Fossil Fuel Fashion: Country's Biggest Textile Player Goes on Polyester Overdrive

Textile recycling experts the world over speak of blends being the bane of the entire process. But in India, poly-cotton is being seen as the saviour of an industry hit hard by cotton price volatility.

In the last week of August, ratings agency CRISIL, an S&P Global company, predicted that "healthy demand from end user industries, and increased blending with cotton yarn due to decadal high prices of cotton, will drive revenue growth of 18–20% this fiscal for polyester yarn manufacturing sector."

The CRISIL analysis said that the operating profitability of the polyester yarn segment was expected to increase by 100 basis points to ~11% this fiscal, "driven by continued high-capacity utilisation (over 90%) due to demand growth and healthy polyester yarn spread (difference between prices of polyester yarn and its raw materials)." The analysis was based on the performance of 24 players that account for about 40% of the sector's revenues.

It said: "Polyester yarn is used mostly in athletic and leisure wear, home textiles and garments. Recovery in demand from these end-user segments and multiple price hikes had led to a revenue growth of 60% last fiscal, though on a low base, with sales volume picking up 15%. Demand is seen to remain healthy this fiscal too, with garments and home textiles segments expected to grow at 16–18% and 12–13% in fiscal 2023 respectively, driven by recovery in domestic demand and moderate growth in exports."

Incidentally, all these key segments figured in the speech of Isha Ambani, who was introduced by father Mukesh at the AGM as the new leader of his conglomerate's retail business—Reliance Retail.

Isha Ambani said at the meeting: “Last year, we sold over 43 crore (430 million) garments, which is enough to clothe the entire population of the US and Canada. We further strengthened our product portfolio by entering categories such as lingerie, saree and home furnishing, and have quickly scaled to establish significant positions in each of them. Our strong design and sourcing ecosystem has enabled us to grow our own brands across apparel and footwear. Our own brands contribute to over 65 per cent of overall revenues.” More or less, the same segments that CRISIL had mentioned.

The Director of CRISIL Ratings,Gautam Shahi, explained the context: "Polyester yarn is cost effective to blend with cotton yarn, and since cotton yarn prices have risen by ~25% over the past year, higher blending has increased the demand for polyester yarn. With increased differential between cotton and polyester yarn prices to sustain, we expect 4–5% of cotton yarn demand to shift to polyester yarn. This shift is expected to continue for most part of this fiscal as end user segments operate in a price competitive environment."

India is a big cotton player: both as a producer as well as exporter. The country has traditionally been a cotton-driven market, but polyester (as also other manmade fibres) are increasingly seen as the segment that is expected to help the Indian textiles and apparel industry to upstage China, which now has a barrage of problems to deal with (from the trade war with the US and rising wages to the Xinjiang fallout and intermittent COVID-19 surges).

When the Indian government in April announced the sop that the industry was anxiously waiting for, the 61 applicants selected for the Production Linked Incentive (PLI) Scheme for textiles were dominated by synthetic players. The Scheme was meant for three categories: MMF apparel, MMF fabrics and products of technical textiles. The proposed total investment expected from the applicants was stated to be ₹19,077 crore and the projected turnover was ₹184,917 crore over a period of five years with a proposed direct employment of 240,134 people.

The Indian government's fancy for polyester was also reflected in the decision to amend the Flag Code of India in December 2021 to allow the manufacture of polyester and machine-made national flags. All this while, flags were required to be made from khadi. Those would have had to be handwoven from handspun cotton, silk or wool yarn.

The amendment was ostensibly meant to boost manufacturing of national flags for the government’s 'Har Ghar Tiranga' campaign to celebrate 75 years of Indian Independence. The move was widely criticised as an affront to India's freedom movement. But that's a story for another publication.

Here, there were many who made hay with the polyester trump card. On 12 August, the Department of Post (DoP) announced that it had taken only 10 days to sell 10 million national flags through its nationwide network of 1.5 lakh post offices. Traders’ body Confederation of All India Traders (CAIT) reported business generation of ₹5 billion with over 300 million flags sold this year. Polyester helped a lot of people make a lot of money.

Polyester is not going away from India any time soon, especially in the context of it being the fibre that is seen as the one answer for the country to overtake China in the textiles-apparel business.

Organisations and individuals at the forefront of the campaign against polyester and the need to move away from petroleum-derived fashion (mostly based in Europe) should rethink about their tactics and, oftentimes, hammer-headed way of taking on polyester, for they have just hit an Indian wall. Without engaging with India (which in any case supplies polyester-made fast fashion items to the same Europe), the anti-polyester drive will simply fizzle out.

But then, it's not that India really needs polyester to be an answer to China. For instance, India's handmade carpets segment is a major foreign exchange earner, and the handloom-handmade sector is dying (literally, pun or not) to be India's response to a world that needs fashion that's truly and traditionally sustainable. And that's the bigger story.