New Delhi: The Indian textile industry is set to experience developments in 2024, driven by improving demand in export markets, resilient consumer spending in key sectors, and favourable geopolitical conditions, according to the B&K Securities report.
In the ready-made garments (RMG) sector, the demand offtake in export markets is anticipated to show substantial improvement in 2024.
While domestic demand is expected to remain moderate due to lower discretionary spending and overstocking from the previous fiscal year, the recovery in export demand is promising. The domestic market could see a boost in the second half of FY25, supported by an increase in wedding days and festive season, although the rise in realisations is likely to be marginal.
The export growth in RMG is expected to be driven by a combination of factors including restocking by Western retailers, increased demand for spring-summer collections, and a general uptick in retail sales.
The anticipated interest rate cuts in the US will further stimulate demand. India’s RMG exports will also benefit from stable cotton prices and uninterrupted supply, enhancing cost competitiveness on the global stage.
The ongoing crisis in Bangladesh, a major player in the global RMG market, presents a temporary tailwind for Indian exporters.
However, the benefits for India are expected to be short-lived due to differences in product portfolios and Bangladesh’s trade agreements with the European Union.
Over the medium to long term, India could see more substantial gains as global buyers continue to diversify their supply chains away from China and Bangladesh, particularly as Bangladesh faces challenges such as rising wages and the loss of its Least Developed Country (LDC) status by 2029.
The home textiles segment is poised to continue its growth trajectory, primarily driven by robust consumer spending in the United States, which accounts for approximately 60 per cent of India’s home textile exports.
The market share of Indian players in the US has been steadily increasing, supported by the China+1 strategy adopted by big box retailers to diversify their supply chains.
India’s competitive advantage in raw material costs and increased domestic capacity will likely sustain its dominance in the US home textiles market.
The Free Trade Agreement (FTA) negotiations with the UK and the European Union offer additional opportunities for growth, potentially leading to higher margins and increased market share for Indian players.
While the industry is on a positive trajectory, it faces near-term challenges such as logistical disruptions due to the Red Sea crisis and uncompetitive domestic cotton prices. Moreover, as sustainability becomes a major theme in Western markets, Indian textile companies will need to invest in compliance with these evolving norms to remain competitive.
