The Indian textile sector, a key contributor to the country’s export basket, is grappling with a challenging global economic landscape. Despite a modest uptick in overall merchandise exports in the first half of the current fiscal year, the sector continues to face headwinds due to sluggish global demand, declining oil prices, and rising logistics costs.
FIEO Sounds the Alarm
The Federation of Indian Export Organisations (FIEO) has expressed concerns over the sustainability of export growth, citing disturbances in the Middle East as a significant risk. While the organisation anticipates a marginal improvement in the second half of the year, it acknowledges the persistent challenges.
Gems and Jewellery Sector Under Pressure
The gems and jewellery sector, a major player in India’s exports, has witnessed a decline of 10.9% in the first six months of the fiscal year. Similarly, the iron ore sector experienced a 27.6% contraction. Several agricultural products, including cereals, cashews, oil meals, and oil seeds, also faced a significant downturn.
Bright Spots on the Horizon
However, there are some positive developments. The export of electronic goods, chemicals, and engineering goods has shown promising growth, contributing to a partial offset of the overall decline.
Impact on Manufacturing and GDP
Economists warn that weak export performance could negatively impact manufacturing output and, consequently, the country’s GDP growth. Sectors such as textiles, automotive, and petroleum products are particularly vulnerable to these external pressures.
While the government and industry stakeholders are working to mitigate the impact of these challenges, the outlook for the textile sector remains uncertain. A sustained recovery will depend on a combination of factors, including a revival in global demand, an easing of geopolitical tensions, and effective policy interventions.
