After a year of contraction, the textile sector is slowly returning to normalcy, having successfully eliminated the inventory pileup. Meanwhile, the stock buildup in the West before the Christmas holiday season continues to drive export demand. September marked the industry’s third consecutive month of expansion, and experts anticipate this growth will be sustained in the second half of the 2023-24 fiscal year.
Textile production witnessed a year-on-year increase of 3.7% in September, outpacing the 1.6% rise observed in August, according to the Index of Industrial Production (IIP) data released recently. Sanjay Jain, chairman of the Indian Chamber of Commerce’s national expert committee on textiles, stated that the industry has bottomed out and is now in a revival phase. Jain emphasized that the inventory pipeline, which accumulated during the COVID-19 pandemic, has now been depleted, and the de-escalation of the Ukraine conflict is aiding the industry’s recovery.
Textile exporters are optimistic, predicting an annual jump of 8-10% in exports for FY24. The improving demand scenario in the US, Australia, and the UAE has resulted in a surge of inquiries, with a 10-20% increase compared to last year. While the industry is still on the path to recovery, experts acknowledge that it is yet to reach pre-pandemic production levels. Textile production in September remained 6.5% lower compared to the same period in 2019-20.
Despite the recent upswing, analysts caution that the current growth is primarily driven by inventory pileup for the festive season in Western economies. Achieving a complete recovery to pre-Covid levels will depend on improving global trade conditions and resolving geopolitical uncertainties.
