Neighbours with benefits!
With improving economic fundamentals and a favourable geopolitical situation, India’s textile and apparel (T&A) exports have shown strong growth over the past two months. According to data from the Confederation of Indian Textile Industry (CITI), apparel exports reached Rs 78.96 billion, and textile exports hit Rs 138 billion in September 2024, marking increases of 17.3 per cent and 9.5 per cent, respectively. Similarly, India’s ready-made garment (RMG) exports rose by 11 per cent in August 2024.
In the past two years, T&A exporters faced significant challenges. Geopolitical events and declining demand in key markets adversely impacted Indian export units in 2022-23, and the situation worsened in FY24, with declining exports and sluggish domestic markets. High raw material costs—both for cotton and man-made fibers (MMF)—along with increasing fabric and garment imports, further burdened the T&A manufacturers.
However, since August 2024, the industry has seen a turnaround, with rising exports to the US and European markets. Stabilising raw material prices have also benefited exporters. The political unrest in Bangladesh, which began in August 2024 and disrupted the global textile supply chain, has brought attention to the struggling Indian textile industry. India’s proximity to Bangladesh allowed for quicker turnaround times for international buyers, who were wary of delays caused by the ongoing chaos in the neighboring country. As a result, many global brands have shifted their sourcing from Bangladesh to India.
According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), these disruptions have resulted in approximately $800 million in financial losses for Bangladesh. It is estimated that 10-11 per cent of Bangladesh’s apparel exports may be redirected to India, creating an additional $300-$400 million in monthly business for Indian textile hubs. Indian manufacturers have already prepared to handle these additional orders, with around 25 per cent of Bangladesh’s textile units owned by Indian companies, allowing them to easily relocate operations back to India.
Despite its strengths, the Indian textile industry faces challenges such as higher labour costs and the prevalence of small production units, which can limit scalability. Additionally, the industry’s limited capacity for manufacturing MMF may cause some buyers to view Indian textiles as less competitive compared to Bangladesh’s lower-cost manufacturing environment.
As major international brands seek alternatives to Bangladesh, they are also considering other countries like Vietnam and Cambodia. Indian mills must compete with these nations and differentiate themselves through superior quality and service. In the midst of South Asia’s shifting geopolitical landscape, industry experts believe the upcoming quarters could be pivotal in positioning Indian textiles as a reliable production hub. India’s vertical integration in cotton garment production could further enhance its appeal as a trusted supplier with a comprehensive value chain. For example, India’s share of apparel exports to the US has grown from 4 per cent to 5.8 per cent in recent years, reflecting a rising preference for Indian textiles among global buyers.
Indian textile and apparel firms are optimistic that the situation will continue to improve in the coming months, ushering in better times for the industry.
