Indian T&A Sector May Continue Its Revival Journey In 2025
While CY2024 was a mix bag for the Indian T&A sector, the year CY2025 is expected to be a better one. The second half of 2024 saw a distinct recovery in the overall exports after multiple quarters of subdued performance in the backdrop of sluggish demand in the major markets of the EU and the US. For the last two consecutive quarters of the past year, both these markets have witnessed demand upsurge as consumers commenced fresh buying on the retail front. Festive season added to the fervour with inventory depleting fast and retailers looking to replenish their stocks eagerly with new merchandise. Other textile items like fabrics and made-ups are also finding renewed buying support in the export markets.
“Things are certainly looking up for the last two quarters and hopefully this will be sustained in the next few quarters as well. In my view, the new year has also started on a positive note and it should be better period for the industry when compared with the year gone by. So far, the macroeconomic condition has also been in the positive territory with some blips here and there. This augurs well for the industry. I am bullish that this year will see good progression in terms of policies as also other government initiatives to boost the overall economy and the industry per se,” says Sanjay Jain, former Chairman, CITI, and MD, TT Ltd.
During the April-November period of 2024, the apparel exports from the country grew 11.30 per cent to $9.8 billion, while textile exports registered a growth 3.9 per cent to $13.5 billion. The cumulative exports of textiles and apparels surged 6.9 per cent to $ 23.3 billion. Meanwhile, the US retail sales increased more than expected in November as households stepped up purchases of motor vehicles and online merchandise, consistent with strong underlying momentum in the economy.
As per Colliers Retail Market Intelligence, November marked a strong start to the holiday season, with core retail sales growing 3.8 per cent in the US. Early Black Friday discounts drove consumer activity, boosting average store visits by 3.4 per cent year-on-year. Apparel sales rose 3.7 per cent in November, with visits up 6.6 per cent y-o-y, driven by generous deals, colder weather and demand for dressier styles and wardrobe essentials.
According to CRISIL Ratings, India’s home textile industry is set to see 6-8 per cent growth this fiscal (FY25) riding on resilient demand from the US and expansion in the domestic market, notwithstanding some lingering logistical challenges. This follows a 9-10 per cent rebound in revenue growth in the last fiscal. The Indian home textile industry derives 70-75 per cent of its revenue from exports, even as the US alone accounts for 60 per cent and the remaining 25-30 per cent from the domestic market. Mohit Makhija, Senior Director at CRISIL Ratings, states that resilient consumer spending and normalised inventory levels at major US retailers will spur exports, though container availability bears watching.
“The home textile market is growing quite nicely and we at D’Decor are proactively leveraging these opportunities. We are ramping up our portfolio of woven upholstery and curtain fabrics, catering to both exports and domestic market. Our recently launched high-performance FabriCare brand has generated an impressive response in the market,” says Ajay Arora, Managing Director of D’Decor which has invested around Rs 250 crore in putting up the relevant capacity to manufacture high-performance home textile fabrics that command 15-18 per cent premium in the market.
“The home textiles market in India is growing by leaps and bounds, supported by growing household income, increasing population, rising income levels, increased organised retail and growth of end-use sectors like housing, hospitality and healthcare. Favourable domestic cotton prices, juxtaposed with international rates, have strengthened India’s competitiveness on the global stage. Additionally, export opportunities should abound with global companies rethinking their supply chains and diversifying production,” says Anil Kumar Jain, Executive Chairman, Indo Count Industries Ltd.
The largest global bed linen player is expanding its footprint in a major way in the US market. The company has recently made two acquisitions in the US. Having acquired a majority stake in Fluvitex USA, Inc., a pillow and quilt manufacture in September 2024, the company in October 2024 bought over 100 per cent stake in Modern Home Textiles, Inc., the manufacturer of a wide range of pillows and other filled products (utility bedding). Earlier, in April 2024, the company had also acquired international home fashion brand Wamsutta from US-based Beyond, Inc.
On the domestic front, multi-pronged approach has been initiated by the policy makers to bolster the GDP growth which fell to a seven-quarter low of 5.4% in Q2FY25 as private consumption and investment decelerated even while government spending recovered from a contraction in the previous quarter. RBI’s report on the economy says that India’s economic growth is likely to improve in the second half of the fiscal, driven by festive activities and upswing in rural demand. For the policy makers, the report suggests that this is the right time to support growth. “The time to act is now to excoriate inflation and revive investment strongly, especially as the usual winter sets in easing food prices and the prospects for private consumption and export accelerating are getting brighter…, “ says the RBI report.
“Recalibration in geopolitical situation, disturbances in Bangladesh and pick up in orders from the US have together had positive bearing on our exports in recent months. Most textile clusters are operating above 90 per cent. Resumption of the UK FTA discussion is good news. If all these factors play out well then perhaps 2025 will be an inflexion point for us. The industry is preparing for green manufacturing. There is need to step up focus on man-made fibres and capacity of garments manufacturing if India intends to increase its global share in the given condition,” says Gurudas Aras, Strategic Advisor to ITA GmbH, Rabatex Industries and Yamuna Machine Works and Independent Director to Rossari Group of companies.
India is considered to be one of the biggest beneficiaries on account of the emergence of the China+1 factor. However, the Indian textile and apparel sector has failed to avail that opportunity. And the reason is not far to seek. The industry has not been able to build up large capacities with economies of scale. Besides, as an industry, India has not been able to align its production as per the global requirements. Still over 60 per cent of country’s export basket is made up of cotton-based products, even as globally the buyers primarily require MMF-based products to cater to the needs of the major markets like the US and the EU.
In the past, countries such as Bangladesh and Vietnam captured a large part of China’s declining share in the global readymade garment exports, while India failed to adequately capitalise on China’s losing share. Recent political upheavals and social unrest in Bangladesh, which is the second largest exporter of RMG after China, once again brings to the fore the issue whether India has the requisite capability and capacity to take advantage of such a situation and attract some of the global garment buyers and brands to look for India as an alternative destination.
Experts and observers firmly believe that India hardly has large garment making capacities which can meet the requirements of these global brands. Moreover, the country’s small and medium capacities are also not competitive enough in terms of pricing and delivery schedule, which is a very crucial component in establishing efficient supply chain. In this scenario, any disruption in Bangladesh is expected to further benefit countries like Vietnam and Cambodia, even as India has to redeem itself with some momentary gains in the short run. Meanwhile, the Indian yarn exports to Bangladesh have encountered some disruption.
Commenting on the outlook, K Selvaraju Secretary General, Southern India Mills’ Association (SIMA) says that there is a need to remove some of the critical aberrations that are bogging down the industry further. The downstream textile industry is suffering from non-availability of raw materials, both cotton and man-made fibres, at international competitive prices. QCO and import duty on yarn have adversely impacted the inflow of requisite raw material to the industry. Falling production of cotton is a matter of serious concern and intervention in mission mode (like TMC) is called for to reverse this debacle.
Analysts are strongly of the view that apart from all this, the industry will have to gear up in a big way to effectively face increasing regulations pertaining to sustainability. Going forward, major markets like the EU and the US are lining up an array of regulations on the textiles and apparel imports. In fact, between 2024 and 2030, a wave of new regulations is likely to come up in an attempt to improve textile circularity and reduce environmental impacts. These include tighter EPR mandates, sustainability reporting requirements and restrictions on waste exports.
As these regulations are likely to reshape the global apparel and textiles value chain, the Indian T&A sector will have to gear up in a big way. Over 70 per cent of T&A production in India is confined to the SME sector, and for these smaller units, compliance can be expensive as it requires overhauling supply chains, investing in sustainable practices and collaborating with recyclers and waste handlers. In fact, most of these units are already struggling with a series of concerns. Apart from manufacturing issues (lack of scale, access to fund and markets), they have to compete with goods from countries like Vietnam, Cambodia and Bangladesh, which enjoy preferential treatment in major markets like the EU and the US.
In this backdrop, observers opine that the Union government will have to come up with a holistic policy framework in order to equip the industry with the requisite wherewithal to effectively face these challenges. Realising the gravity of the situation, the ministry has initiated the process to put up the framework on sustainability for the industry. Here, all the stakeholders will have to play their role and help build a comprehensive policy framework that is more robust in the fast-changing market place.
Knitwear cluster like Tirupur could be a good case study for the entire industry. The cluster, which does over Rs 60,000 crore worth of knitwear business of which 50 per cent is exported, has made big strides in pursuing its sustainability goals. While other textile and garment clusters can learn from Tirupur and initiate their efforts proactively to deal with emerging challenges, the Union government will have to revisit its various ongoing schemes that are aimed at creating a robust textile production base in the country.
Among them, the ambitious scheme to develop seven PM Mega Integrated Textile Regions and Apparel (PM MITRA) parks is quite crucial. If properly implemented, PM MITRA parks will be a game-changer as they are expected to create an enabling ecosystem for the Indian textile industry, wherein smaller and bigger businesses can co-exist in a more complementary and cohesive manner.
