For the most part of 2012 and 2013 the textile sector was besieged by twin impacts of slowing domestic consumption and slowdown in export demand. However recent pick-up in export demand is expected to improve the fortunes of textile sector in the coming year. With domestic economic growth expected to remain subdued during first half of 2014, improvement in domestic consumption of textile products is still some distance away.
Higher demand from US market would propel textile exports from India: In dollar terms the total value of textile products exported from India touched US $33 Bn in FY13, a decline of 3 per cent compared to previous fiscal. Lower demand from key markets of the US and EU, which was reeling under recessionary condition, was the major reason for the dip in exports during FY13.
However, growth in textile exports have picked up since Apr-13 compared to same period last fiscal year. During Apr-Sept 2013, textile exports from India reached US $16 Bn, which is 8 per cent higher than the exports during the same period last year. Pick-up in demand from the US market is the prime reason for this reversal. With economic scenario in the US showing signs of revival, demand for textiles from US consumers is expected to go up. This would help in the growth of textile exports from the country.
Weak rupee to aid in higher export realisation: Revival of demand from the US market along with continued weakness of rupee against US dollar is expected to aid in higher export realisation in rupee terms. Initiatives to reduce the dependence on select western markets to help in the growth of the sector. Developed markets of the US and select countries in EU region account for the bulk of textile exports from India. Economic recession in these markets since 2008 impacted the textile exports from India. To reduce the dependence on these markets the government has incorporated several measures in the Focus Market Scheme.
As per the new measures, textile exporters would be able to avail duty credit scrip on export to 26 additional countries apart from existing destinations. Continued government support in the form of policies like Focus Market Scheme would encourage exporters to explore markets outside the traditional destinations of the US and EU. These developments are expected to widen the export markets for textile exporters and gradually limit the over dependence on select markets.
(Textile Sector Outlook 2014 by Dr Arun Singh, Sr Economist – Dun & Bradstreet India.)