Indian Apparel Exports Set To Grow 9-11% In FY25: ICRA
Indian apparel exporters are projected to register 9-11% revenue growth in FY25, driven by the gradual liquidation of retail inventories in key global markets and a shift in sourcing to India, according to a report by ratings agency ICRA.
The recovery follows a sluggish FY24, which saw exports decline by 2% due to high retail inventories, muted demand, supply chain disruptions, and geopolitical issues. Key drivers for the FY25 growth include PLI schemes, export incentives, and potential free trade agreements (FTAs) with the UK and EU, ICRA noted.
“India’s exporters will benefit from inventory restocking and a de-risking strategy by buyers, especially in the US and EU markets,” said Srikumar Krishnamurthy, Senior Vice President & Co-Group Head, Corporate Ratings at ICRA.
However, demand uncertainties remain in certain markets amid geopolitical challenges and macroeconomic concerns.
Despite revenue growth, ICRA forecasts operating margins to shrink by 30-50 bps YoY in FY25 due to rising labour, freight, and operating costs. However, capex spending is expected to rise by 5-8% of turnover in FY25 and FY26, signaling long-term growth prospects.
The report noted that Bangladesh remains a competitive player due to preferential duty access to the US and EU, aided by its least developed country (LDC) status. However, geopolitical tensions in Bangladesh may prompt capacity shifts to other countries, including India.
ICRA highlighted that PLI schemes and the PM MITRA initiative will provide India with scale benefits and strengthen its man-made fibre (MMF) value chain, enhancing its global competitiveness. “These initiatives are expected to help India expand its share in the global apparel trade,” Krishnamurthy added.
The outlook for Indian apparel exports remains favorable as evolving consumer trends and increased product acceptance continue to bolster the sector’s growth potential.
