The leather and apparel units were among the worst sufferers on account of appreciation of the dollar against the rupee, as the suppliers were unable to fulfil export obligations.

According to the Apparel Exports Promotion Council, the economic crisis in the United States has affected the apparel industry, with apparel exports going down by 15 per cent in Tirupur, where as much as 56 per cent of the country's total knitwear exports are produced.

"In knitwear exports alone, Tirupur registered a fall of 5 per cent due to the crisis. Tirupur exports apparel worth Rs 14,000 crore (Rs 140 billion), while the total quantity of knitwear exports is worth Rs 16,500 crore (Rs 165 billion). But this year, we expect it to be 5 per cent less due to the recession," an industry source said.

Besides, the industry here was also in a bad shape due to massive power cuts, effected to tide over the electricity shortage problem in the state.

Citing the liberalised textile policy and also the volatile market, the Tamil Nadu government in its policy note said the fluctuations in the market trend, inadequate quality of cotton supply, paucity of funds and existence of unviable units with old machineries, the textile industry was unable to flourish and about 392 mills are now in closed condition.

In addition to this, yarn manufacturing units are also in poor condition, as countries like Bangladesh and Gulf, which import raw material from India, have cut down on their demand.