The Indian textile industry is poised for a period of robust growth, driven by a surge in international demand, particularly from the United States. However, rising input costs, primarily for cotton and man-made fibres, threaten to dampen the sector’s competitiveness.
A Bright Outlook for Exports
The export of readymade garments surged by a significant 17.3% in September, reaching $1.1 billion. This positive trend is expected to continue into October, fueled by strong demand from key markets like the US and EU. Chandrima Chatterjee, Secretary General of the Confederation of Indian Textile Industry, noted that the industry has successfully expanded its market share in these regions.
The home textile segment is equally optimistic, with Crisil projecting a growth rate of 6-8% this fiscal year. The segment’s reliance on exports, particularly to the US, which accounts for a substantial 60% of its revenue, is a major driver of this growth.
The Price Conundrum
While the demand outlook is promising, the industry is grappling with rising input costs. Indian spot cotton prices have declined recently due to new arrivals, but they remain significantly higher than international benchmarks. The government’s Minimum Support Price (MSP) for cotton, coupled with an 11% import duty, is preventing further price corrections and making Indian cotton and cotton products less competitive in the global market.
The situation is similar for man-made fibres like polyester and viscose. Indian prices for these fibres are significantly higher than those in China, further eroding the industry’s competitiveness. Additionally, stringent Quality Control Orders (QCOs) imposed by the Bureau of Indian Standards are hindering the import of these fibres, limiting manufacturers’ options.
A Call for Policy Intervention
To fully capitalise on the global demand opportunity, the industry is urging the government to implement supportive policies. K Selvaraju, Secretary General of the Southern India Mills Association, suggested exempting import duty during the off-season and relaxing QCO requirements to boost exports.
While the Indian textile industry is well-positioned to benefit from rising global demand, addressing the challenges posed by higher input costs is crucial to sustaining long-term growth and competitiveness.
