Long-term prospects of India’s textile industry seem strong: Report

The long-term prospects of India’s textile industry seem strong as channel inventories seem to be normalising at the global retailer level, the United States may raise tariffs for China, labour costs are rising in Vietnam and Bangladesh is seeing political instability, according to a report by Systematix Research.

Indian companies may pass on part of rise in costs to consumers, potentially leading to higher prices for textiles and apparel. This could dampen demand in key markets like the United States.

Nevertheless, larger macroeconomic trends are beginning to tilt in India’s favour, positioning it as a more appealing sourcing hub for global retailers, said the report.

The Indian textile industry’s long-term prospects seem strong with normalising global retail inventories, probable US tariff rise for China, rising labour costs in Vietnam and Bangladesh’s political chaos, Systematix Research said.
Indian textile-apparel prices may rise.
Stable cotton prices, favourable forex rates and operational efficiency may bolster Indian firms’ profitability in the long run.

However, Indian textile firms have reported a lacklustre performance in the fourth quarter of fiscal 2024-25 (FY25).

Revenue of such firms witnessed a modest 5-per cent growth year on year (YoY), while earnings before interest, taxes, depreciation and amortisation (EBITDA) declined by 3 per cent, and profit after tax only slightly increased by 3 per cent YoY, primarily due to ongoing tariff uncertainties and weak sales volumes.

Spinning companies experienced a slight improvement in gross margins because of falling cotton prices and steady yarn prices, while garments benefitted from normalised retailer inventories, boosting sales volumes, the report noted.

In contrast, India’s home textiles segment continued to experience reduced demand, with significant volume declines when compared YoY and quarter on quarter.

However, stable cotton prices and favourable foreign exchange rates, along with continued focus on operational efficiency, are expected to bolster profitability for Indian textile companies in the long run, it observed.

Systematix Research expects the prevailing cotton-yarn spread of 0.70 per pound to sustain and the Cotton Corporation of India (CCI) to remain as the sole supplier of cotton, unless the government decides to waive off the import duties on cotton.

Fibre2Fashion News Desk (DS)