Investment of Rs. 6,900 crore in textiles projects in the southern States of Kerala, Andhra Pradesh, Karnataka, Tamil Nadu and Puducherry is projected during the current year.

Tamil Nadu and Andhra Pradesh will account for 95% of the investments. The bulk of the projected investments will come in the private sector, said in a study of Confederation of India Industry (CII), which also predicted an early revival in growth for the textile industry in the country as a whole.

The CII review found that sales and profitability of the textile sector, especially mills and textile and clothing units, has improved and revival is expected to translate into higher demand for spun yarns, while spinners are reporting a slightly slack demand for cotton and polyester cotton yarns, polyester viscose yarn manufacturers continue to receive export orders.

The textile sector’s financial performance was hit by the rupee appreciation since 2008, which made Indian exports uncompetitive.

There has also been a gradual slowdown in the growth of cotton consumption caused by declining export sales and shrinking profit margins. The CII study found a sharp increase in operating costs and subsequent decline in margins during 2009.

The industry expects about 8% decline in cotton production in India, which is the second largest producer of cotton in the world, accounting for close to 20% of the world production. There could be about 5% decline in domestic cotton consumption in 2009, but the CII study expects a marginal growth in consumption in 2010. In the wake of firm prices in 2009, there are indications that India’s cotton acreage may increase from 9.37 million hectares in the current year to 9.5 million hectares in 2010.