The festive season in Western markets failed to stop the downtrend in textile exports in November 2023. Readymade garments (RMG) experienced a 15 per cent decline in exports from $10.36 billion in April-November 2022 to $8.84 billion in the corresponding months of 2023. Only cotton yarn and handloom products, which emerged as beacons of growth, recorded a commendable 6 per cent increase in the April-November 2023 period.
Adverse economic conditions in the major export destinations – such as European Union (EU), the US and the Middle East countries – have influenced the apparels demand. While EU, which accounts for a fifth of India’s apparel exports, is still grappling with the ripple effect of Ukraine-Russia war, the US and Middle East (impacted by ongoing Israel-Gaza war) have witnessed lower demand in 2023 compared to 2022.
However, the worst seems to be behind as 2024 dawns. With the US market showing signs of revival, experts believe exports to improve in the upcoming months. According to CRISIL, India’s textiles industry is expected to rebound in calendar year (CY) 2024 on three tailwinds: consistent improvement in domestic demand, gradual recovery in exports and lower cotton prices.
The domestic market, which accounts for around three-fourths of the overall demand, continues to witness a steady growth. Demand ahead of the spring-summer season in the West is likely to boost the off take of garments from India, thereby supporting the growth of the entire value chain. With better consumer demand big retailers in the overseas markets will have to restock inventory, improving order flow from Indian exporters.
Cotton prices in India have eased from their highs and, with cotton production estimated to be higher this cotton season, the prices are unlikely to rise anytime soon. Higher availability of cotton and low cotton prices can offer a much-needed support to the domestic textile value chain, which relies more on natural fibre than crude oil-linked synthetic textiles.
As the largest exporter of cotton yarn, India supplies to the very nations it competes with in the global apparel market. To further propel exports, India needs to rethink on how to capitalise its dominant position in cotton production (as the country accounts for approximately a quarter of the global output). One way could be to encourage (or force via government policy interventions) companies to increase value addition of yarn into garment instead of pushing for raw material or yarn exports.
There is also a need to create globally-recognised Indian garment brands for better margins. As a step in this direction, Clothing Manufacturers Association of India (CMAI) hosted the first “Brands of India” event recently in Dubai, where more than 350 domestic brands exhibited their wares. In the future, CMAI is looking to hold the event in other markets like Australia, the US and the UK.
A favourable landscape marked by easing cost pressures and demand revival is likely to support the growth of Indian textiles in 2024. Addressing structural challenges and leveraging policy support are pivotal for the textile industry’s sustained growth.
Wish you all a prosperous 2024!