July 15, 2024

Indian Textile Industry Is Poised For Rebound In Sales – CRISIL

The CRISIL SME Tracker has reported that the Indian textile industry is poised for a rebound in sales after two years of contraction.

The previous two financial years were challenging due to volatile cotton prices and subdued export demand.

“However, the industry is expected to close this fiscal with lower revenue due to a correction in cotton prices and subdued exports of readymade garments,” the report added.

Export markets, which typically contribute a significant portion to the textile industry, have been affected by slowdowns in key markets.

Nevertheless, domestic demand has remained steady, which is a positive sign, particularly for small and medium enterprises (SMEs), which constitute about 75 percent of the Indian textile value chain.

In the upcoming fiscal, growth is expected to revive driven by sustained domestic demand, stable cotton prices, and an anticipated recovery in exports.

The report forecasts stable cotton prices due to lower consumption, while volume growth for cotton spinners is expected to normalise after a significant surge this year.

Regarding garment manufacturers, the report projects that volumes are projected to increase gradually in line with improvements in major export destinations such as the US, EU, and UK.

However, key export garment clusters like Tirupur, Bengaluru, and Mumbai may experience slower revenue growth, when compared to clusters relying on domestic markets like Kolkata and Ludhiana.

Despite the current contraction, profitability is anticipated to improve in the coming period due to stable cotton prices and reduced inventory losses.

Medium-term prospects are bolstered by free trade agreements with the UK and the establishment of textile parks under the PM MITRA scheme, aiming to enhance India’s competitiveness.

“Additionally, the Production Linked Incentive (PLI) scheme is expected to provide a further boost to domestic manufacturing,” the report stated.

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