Down, but not out?

In 2023-24, for the second consecutive year, India’s textile exports recorded a fall. Exports in FY24 stood at $34.4 billion, a drop of 3 per cent (down by $ 1 billion) compared with FY23 and 16.2 per cent against FY22 (a year in which the industry registered a record high exports of $ 44 billion). Exports took a hit because of the slowdown in the global economy resulting from the current geopolitical issues.

According to the Federation of Indian Export Organisations (FIEO) official, consumer confidence in western countries has dropped with their economy taking a hit (in fact, some countries are experiencing recession). The persisting Red Sea crisis has escalated freight prices by manifold adding to the cost for Indian exporters.

Readymade garments, contributing 42 per cent to overall textiles exports, witnessed 10 per cent drop in FY24 over the previous year. In FY24, India exported $14.5 billion worth of apparels. Exports from the knitwear capital of India, Tirupur, have plunged from $ 4 billion in FY22 to $3 billion in FY24. Experts observe that exports to the US and Europe have been affected as purchasing new value-added garments has become the least priority for customers particularly in Europe.

Cotton textiles segment was the only outlier. Exports of the segment comprising cotton yarn, fabs, madeups and handloom products witnessed a 6.7 per cent increase (up by $740 million) to $ 11,683 million in FY24 over FY23 ($ 10,943 million) due to the surge in export of cotton yarn. Timely disbursal of export benefits under RoDTEP and RoSCTL schemes also helped the export industry remain competitive.

After a long lean spell, the textile industry has started seeing signs of revival with demand in some of the key markets reviving. According to the Apparel Exports Promotion Council, the past two months have seen a recovery and the apparel industry expects to reach $ 20 billion in exports in FY25 (from $14.5 billion in FY24). Reasons for this bullishness are the anticipated Free Trade Agreements (FTAs) to be signed by India with the EU and the UK.

At the moment, the industry continues to face a few challenges (such as availability of raw materials at international prices; high interest cost; preferential access to key markets, etc) that need the government’s intervention. Experts are also urging the government to announce an emergency credit line guarantee scheme for the textile sector to prevent the MSMEs from exiting their business.

The Textiles Ministry is reportedly working on its Vision 2047, as per which India will aim to achieve an ambitious target of $ 600 billion in textile exports by 2047 (from $44 billion in FY22) and growing the domestic market to $ 1.8 trillion (from $110 billion in 2022), led by a surge in fast fashion and growth in ecommerce. According to the ministry officials, once the new Union government is formed after the general election, a 100-day plan and then a long-term plan till 2047 could be announced.

The textile industry will be eagerly looking forward to this Vision 2047.