Fuelled by FTA negotiations with the UK and the European Union, the Indian textile industry is poised to grow in 2024, according to a report by B&K Securities. However, logistical challenges and the need to meet stringent sustainability norms may pose short-term obstacles in this growth.
Export demand in the ready-made garments (RMG) sector is anticipated to improve significantly in 2024. While domestic demand may remain moderate due to reduced discretionary spending and overstocking from the previous fiscal year, a recovery in export demand looks promising. The domestic market could see a boost in the second half of FY25, driven by an increase in wedding dates and festive seasons, although price realizations are expected to rise only marginally.
Export growth in the RMG sector is likely to be propelled by several factors, including restocking by Western retailers, higher demand for spring-summer collections, and a general uptick in retail sales. Additionally, anticipated interest rate cuts in the US are expected to further stimulate demand. India's RMG exports will benefit from stable cotton prices and uninterrupted supply, enhancing the country's cost competitiveness on the global stage.
The ongoing crisis in Bangladesh will provide a temporary advantage for Indian exporters. However, this benefit is expected to be short-lived due to differences in product portfolios and Bangladesh's trade agreements with the European Union. In the medium to long term, India could see more significant gains as global buyers diversify their supply chains away from China and Bangladesh, particularly as Bangladesh grapples with rising wages and the impending loss of its Least Developed Country (LDC) status by 2029.
Largely driven by strong consumer spending in the United States, the home textiles segment is also expected to continue its growth trajectory. Indian players have been steadily increasing their market share in the US, supported by the China+1 strategy adopted by major retailers to diversify their supply chains. India's competitive edge in raw material costs and increased domestic capacity are likely to sustain its dominance in the US home textiles market.
Despite the positive outlook, the industry faces near-term challenges, including logistical disruptions due to the Red Sea crisis and uncompetitive domestic cotton prices. Moreover, as sustainability becomes a major focus in Western markets, Indian textile companies will need to invest in compliance with evolving norms to remain competitive.
