The textiles industry is anticipated to witness a resurgence in revenues in the upcoming financial year, signalling a positive turnaround after grappling with erratic cotton prices and lacklustre export demand over the past two financial cycles. As the current financial year draws to a close, the industry is likely to register a decline in revenue owing to the substantial adjustment in cotton prices by nearly 25%, coupled with subdued exports of readymade garments which have tempered profit margins.
Despite these challenges, the sector remains buoyed by robust growth in domestic demand while grappling with sluggish export volumes due to a slowdown in key markets. This scenario has raised concerns for small and medium enterprises (SMEs) constituting a significant portion of the textile value chain.
Looking ahead, industry experts foresee a revival in growth momentum fueled by sustained domestic demand, stabilised cotton prices, and a potential recovery in exports. The stability in cotton prices is expected to persist as consumption lags behind production, enhancing the cost competitiveness of the cotton textile value chain.
In the realm of cotton spinners, volume growth is expected to normalise following a remarkable 80-85% surge in the current year from a lower base. Concurrently, players in the readymade garment (RMG) segment are poised to witness a modest uptick in volumes corresponding to a gradual improvement in major export markets like the US, EU, and UK.
However, nuances exist among RMG clusters in terms of growth projections. While export-oriented clusters like Tirupur, Bengaluru, and Mumbai are anticipated to experience more subdued revenue growth of 6-7% in the next financial year, clusters like Kolkata, Kanchipuram, and Ludhiana with a stronger reliance on the domestic market are expected to outperform their export-centric counterparts.
Furthermore, following a contraction in profitability during the current financial year, industry players are projected to witness an improvement in their financial metrics owing to stabilised cotton prices and reduced inventory losses.
Looking towards the medium-term horizon, initiatives such as free trade agreements with the UK and the establishment of textile parks under the PM MITRA scheme are set to augment India’s competitiveness in the RMG segment. The introduction of the Production Linked Incentive scheme is also poised to propel domestic manufacturing activities, amplifying the industry’s growth trajectory.
In essence, the textiles industry is bracing for a revitalised phase with a confluence of factors paving the way for enhanced revenues, reinforced competitive positioning, and improved profitability outlook. As the sector gears up for the next financial cycle, a sense of cautious optimism prevails underpinned by strategic initiatives and market dynamics poised to shape the industry’s evolution in the foreseeable future.
