A rapid increase in the export of cotton yarn due to comparatively lower domestic prices of raw cotton, and a marginal increase in textile demand from the US and European markets have led to a moderate revival of the country’s labour-intensive textile industry, which has remained at a low ebb since the pandemic.
As per official data on Niryat Portal, the export of readymade garments, cotton yarn and fabrics for the period between October 2023 to May 2024 stood at $17.9 billion compared to $ 17.5 billion for the same period in the previous year, bucking a declining trend. Yarn exports between during witnessed a growth of 51% in volume terms.
However, industry observers and experts caution that the green shoots of recovery would not be sustainable if not backed by policy support. “The demand is still below the pre-Covid level. Also, cotton prices have spurted in recent weeks, neutralising the price benefit for textile manufacturers,” said an industry observer.
Bharat Boghra, Chairman, Spinners Association (Gujarat) (SAG), told FE, “India’s cotton production for this year is better compared to that in the US and Brazil. This combined with lower prices of Indian cotton compared to the international prices, have resulted in a strong demand for Indian cotton.”
He however struck a cautionary note. “With no end to the geo-political crises in the near future, consumers are getting used to the prevailing situation which is reflected in the slight increase in international demand. But this is the short term trend and the importers in Europe and US are still not maintaining inventories. This trend has reduced the order book cycle for the manufacturers to three months against that of a six-month order book cycle previously.”
Ramakrishnan M, Managing Director, Primus Partners, said, “The textile industry is showing some signs of recovery now. Domestic demand has been steady and is expected to remain so. E-commerce penetration is expanding in tier 2 and tier 3 areas, and the quick or impulse purchases are driving higher sales”.
“But the international unrest, increased cost of production (majorly due to 40% to 50% increase in freight charges) combined with global inflationary trends and muted consumer confidence in the economic growth are also impacting the industry. This is why we expect the global demand to remain flat at best or go down slightly”, added Ramakrishnan.
Bhavin Parikh, MD & CEO, Globe Textiles India, a Gujarat based textile firm catering to global and domestic markets, said, “China+1 policy along with behavioural changes in consumption are helping the textile industry to revive. But stagnant order book cycle of around three months reflects industry’s lack of confidence in global economic growth prospects.”
It may be recalled that newly appointed Textile Minister Giriraj Singh had recently announced that the government is considering the inclusion of garments in the PLI Scheme for the Textile sector and the revival of SITP (Scheme for Integrated Textile Parks). He also set the target of $ 50 billion worth of shipments from the textile industry for this year.