April 20, 2024

Indian Clothing Exports Expected To Rebound In Current Fiscal

Indian clothing exports are anticipated to rebound in fiscal 2024-25 at around 8-9 percent led by expected demand from inventory replenishment by brands and retailers in key markets of the US and EU.

“After a sluggish fiscal 2023-24 impacted by high inventory levels, apparel exports are expect to touch Rs 28,150 crore in the ongoing fiscal as against Rs 26,000 crore in the earlier fiscal,” an ICRA analysis report said.

Fashion brands and retailer in the US and EU which together account for 55 percent of global trade, are forecast to clear excess inventory and place orders for the Spring/Summer 2024 season.

According to the analysis, the Red Sea conflict has not immediately impacted costs for Indian exporters operating on FOB basis, except for delayed shipments.

“However, any prolonged escalation could affect export volumes and realisations due to higher shipping costs,” the ratings agency warned.

ICRA anticipates increased capital expenditure in the current fiscal FY2025 as exporter’s position themselves for a revival in demand and leverage the China Plus One sourcing trend.

ICRA has projected a 5-6 percent year on year drop in revenue for its sample exporters in the previous fiscal due to a 22 percent drop in US clothing imports.

The ratings agency expects operating margins to moderate to 9.8-10 percent in fiscal 2023-24 from 11.3 percent in fiscal 2022-23 due to a relatively weaker performance.

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