Indian Textile Industry Struggles with High Raw Material Costs, Decreased Export Demand, and Low Capacity Utilization

In 2022, the Indian textile industry experienced some difficulty. Their profits were hurt by a triple whammy of high raw material costs, decreased export demand as a result of the Russia-Ukraine war, and low capacity utilisation. For spinners, the situation grew worse as domestic cotton prices traded at a significant premium to those found elsewhere, rendering Indian cotton goods uncompetitive on a worldwide scale.

So it comes as no surprise that textile equities have taken a beating. For instance, midcap textile stocks like Vardhman Textiles Ltd and Trident Ltd have experienced corrections of 29% and 37%, respectively, in 2022. Small caps, like Indo Count Industries Ltd., took a heavier hit over the period, plummeting by about 47%.