Indian home textiles industry’s unstoppable boom

Indian home textiles industry’s unstoppable boom

The need for home textiles has increased as the world has begun to adopt hygienic measures post-Covid. This, according to Divya Shetty, presents a big opportunity for Indian firms, as the country is one of the leading players in the global home textiles market.

Home textiles are materials and clothing that are used to enrich the internal environment, such as indoor spaces and furnishings, as part of home furnishings. Home textiles are known for offering not only beautiful qualities to our surroundings, but also for making our lives more pleasant. Simply said, home textiles are materials and clothing that we utilise as part of our home decor. Overall, home textiles are inextricably tied to the interior of any home.

Home textiles are the second most important category in which India has a competitive edge over other nations, after cotton yarn, and these are the structural changes that are driving the home textiles demand today, according to Anuj Sethi, Senior Director, Crisil Ratings.

  • Focus on health & hygiene driven by pandemic
  • China+1 theme, US ban on import from China’s Xinjiang region
  • In the short term, despite supply chain challenges, cost inflation, the demand will not be impacted much. Recovery in demand from hospitality segment globally and price hikes taken by players to also support revenue growth

Table 1: Home textile industry ($ 8 billion) in India

FY22ESizeContribution
Revenue from Exports$ 4.8 billion60%
Domestic Revenue$ 3.2 billion40%

Segment dominating home textiles

Home textiles have always been an integral part of home décor, irrespective of the space they occupy – from living room to bedroom to kitchen and bathrooms. Every now and then, the demand for a certain segment may vary. The most in demand are the drapery textiles, followed by upholstery. Bed linen is more like a staple and is never out of demand. The same can be said about bath linen.

“I think for any household, the drapery and upholstery are like the proteins and fats in a dish. These components are the main highlight of any preparation. Bed and bath linen are like carbs. A proper balance of all these components is important to complete the décor in any space. We find that drapery textiles are always in great demand,” says Sachin Chauhan, Director, Nirmal Furnishings.

As per Crisil, the bedsheet segment (accounts for 48% of overall home textile exports) and is expected to continue report higher growth due to increase in-home consumption with hybrid/work-from-home culture. For instance, in 2021, bedsheet exports to US from India increased 50% yoy compared to 43% experienced for terry towels. India continues to dominate in bed sheet segment with 57% market share in exports to US while share of India is at 43% in terry towel exports to US. (Refer to table 2 for the year wise comparison)

Table 2: Capacity utilisation of home textiles from FY19 to FY22E

Capacity utilisation^FY22EFY 21FY 20FY 19
Bath linen75-80%60%48%66%
Bed linen85-90%69%62%68%

^for four large players contributing 60-65% of the sector’s revenue

Sustainable home textiles

The global garment and home textiles industry is a significant contributor to global warming, accounting for roughly 10% of total annual CO2 emissions. Switching to organically farmed natural fibres and recycling created fibres from non-renewable sources is a high priority for the company and the government, and both are taking steps in this direction.

Chauhan asserts, “We have introduced a lot of fabrics that are made using natural yarns or recycled materials and all our production partners have very strong policies supporting eco-sustainability and have numerous certifications such as ISO 14001:2015, Control Union-Organic Content Standard for use of organic contents and also for organic cotton, Global Recycled Standard.”

When asking about recycled fibres, he says, “We are committed to including a lot of collections made using recycled fibres / materials and have already started making a shift in that direction.”

On the other side, according to C Bose, President Emeritus, Textile Association of India (Mumbai Unit), there is a need to produce sustainable home textile products by Indian firms. “We should start creating eco sustainable machines and products in the country and rely less on imports from other countries,” he adds.

Substitute material

While cotton is the preferred organic fibre in textiles, it has been observed that whenever the spreads between cotton and man-made fibres (MMF) have increased, with cotton becoming more expensive, there is a moderate substitution on the demand side. Underhome textiles, while there may be moderate temporary shift at the bottom of the pyramid over the short term, the scope for substitution of cotton, especially in the bed and bath linen categories, is limited considering higher comfort factor vis-à-vis MMF. Considering the Xinjiang issue and lower acreage under cotton in India, the cotton prices are likely to remain steady at high levels.

According to India Ratings, Input price increases have had little effect on the home textiles market because demand has remained high. Additionally, with buyers redirecting their exports from China, the Indian home textile sector has shown positive signs.

Overall polyester blending (not specific to home textile) has seen increase in India by about 500 bps to 45% over last 4 years. However, this proportion is lower than global average of 60%. As polyester yarn is cheaper in comparison to cotton yarn, increased blending is likely to continue, but this market is largely dominated by China.

Future of home textiles in India

Home textile in India seems positive and unstoppable in the coming years as the sector is expected to grow at 14-15% in FY23 driven by healthy demand from exports, benefit of new FTA with UAE/Australia (refer to table 1 for the revenue distribution). Besides, domestic demand also remains healthy. Overall revenues will also benefit from higher realisations, due to increase in cotton prices. This healthy growth in revenue is on the high base of FY22 in which revenue is estimated to grow by 25-28% year-on-year, driven largely by exports (refer to table 3 for (refer to table 1 for country wise breakup of Indian home textile exports), states Crisil.

Table 3: Country wise breakup of Indian home textile exports 

 Size% contribution
Exports to USA$ 2.65 billion55%
Exports to EU$ 1.2 billion25%
Exports to other countries$ 0.96 billion20%

Increased hygiene consciousness, rising consumer spending on home renovation, expansion in the real estate market, and fashion sensitivity towards domestic furniture will all contribute to the industry’s steady rise.

As per Ind-Ra, free cash flows of most players are likely to remain positive and players such as Welspun India and Trident will not face any liquidity challenges to support operations, given their healthy cash & cash equivalents and short working capital cycles.

Stating that the Indian home textile industry has a bright future, Bose observes, “Industry has a lot of potential in our country! Whatever the home textile industry is doing now has the potential to expand by 20-40 times. We simply need the right skills and government support. I am convinced that once this is handled, India would be the global leader in the home textile industry.”

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