Thanks to strong retail sales in the US and better outlook for the upcoming festive season in export-dominated markets, India’s home textiles exporters’ revenue is set to grow around 20 per cent in fiscal 2022, and also grow global market share.
Along with global companies adopting a ‘China plus one’ sourcing strategy, this is likely to benefit homegrown home textile exporters.
This was based on the analysis of 50 home furnishing export companies – as per a report of Crisil, leading ratings agency.
Crisil also expects the companies it analysed to improve their operating profitability by 200-250 basis points to 18 per cent this fiscal.
It is worth mentioning here that exports account for 60 per cent of the Rs. 55,000 crore Indian home textiles industry.
Gautam Shahi, Director, Crisil Ratings said, “Export demand has been healthy so far this fiscal and is expected to stay strong in the third quarter, going into the festive season, as the impact of the pandemic wanes.”
US accounts for 55 per cent of the export revenue pie of the Indian home textile sector. Crisil estimates suggest that exports to the market grew 42 per cent year-on-year in the first half of calendar 2021, compared with 15 per cent growth in the corresponding pre-pandemic period of calendar 2019.
The ‘China plus one’ strategy is clearly playing out. This is visible in a sharp increase in India’s share of US imports of cotton bed sheets and terry towels to 51 per cent in the first eight months of calendar 2021 versus 46 per cent in calendar 2020, while that of China has reduced to 16 per cent from 20 per cent.
It is also a positive indication that average capacity utilisation of three large listed home textile players in the bed linen segment increased to 87 per cent in the first quarter of the fiscal when compared to pre-pandemic levels of 68 per cent.
Extension of the RoSCTL scheme till March 2024 and better coverage of fixed costs from higher capacity utilisation will help offset the sharp increase in prices of cotton, the key raw material.
