After boom, prepare for scale up
While speaking at the recently held Asian Textile Conference, Union Textile Minister, Piyush Goyal, urged the industry to double its revenues and achieve exports of $100 billion over the next 5-6 years by taking advantage of the country’s textile ecosystem and the new trade environment in the post-Covid world.
India’s total textile and apparel (T&A) market size is estimated to be about $ 170 billion with export accounting for about 25% of the total market size. The last few years have been quite challenging for the Indian T&A industry with exports declining to about $ 30.9 billion in 2020-21 from levels of $ 37.5 billion in 2018-19. However, as a result of timely policy support from the Government and conducive global market, Indian textile industry bounced back in 2021-22. During 2021-22, India achieved its highest ever T&A exports of about $ 43.4 billion which accounted for about 10.3% of India’s total merchandise exports during the year.
Besides China, India is probably the only other country in the world which is self-reliant in every aspects of textile & apparel production – right from the production of raw materials to the delivery of finished products. In terms of raw materials, India is the lead producer of cotton & jute and second largest manufacturer of polyester, silk and fibre in the world. The global textile industry is in a flux at present and is witnessing a reshuffle of the entire supply chain with terms like ‘China Plus One’, re-shoring, onshoring, etc being commonly heard. The global T&A exports stood at $828 billion in 2021, registering a growth of 8% over $770 billion in 2020.
After a prolonged period of economic sluggishness due to Covid 19 pandemic, Indian textile industry started showing signs of an upward trend in 2021-22. This trend is quite evident in the Ranking of the Top 50 Textile Companies, featured in the “Cover Story” of ITJ September 2022 edition. For example, in “Large” category (i.e. companies having turnover of above Rs 5 billion), the cumulative sales of ITJ’s Top 25 Textile Companies in FY22 stood at Rs 690.23 billion – a growth of 64% over cumulative sales of Rs 420.79 billion in FY21. At the same time, cumulative market capitalisation of these 25 companies grew by whooping 269.7% in FY22 – showing a rise in investors’ confidence in the textile sector. Profitability of these companies also zoomed during this period (from FY21 to FY22) mainly because of high exports, pent up demand in domestic market and sufficient access to cost-effective raw material (atleast in the first half of 2021-22). Many loss making units in FY21 registered more than 1000% growth in the profit in FY22.
Though the growth prospects have weakened in FY23 with unprecedented increase in commodity prices and conflict between Russia & Ukraine putting breaks on the growth of the global economies, experts believe India will continue to remain a bright spot in the world.