Domestic Demand Will Drive textile Sector Growth In FY24

The textiles sector is predicted to have moderate revenue growth in 2023–2024 (FY24), as domestic demand will continue to rise steadily despite a slowdown in important export markets, which typically make up a quarter of the market.

This is disappointing news for small and medium-sized businesses (SMEs), who account for about 75% of the value chain for textiles and are estimated to have had strong revenue and profit growth in FY22 as a result of a post-pandemic surge in exports.

Revenue and profitability in the sector are anticipated to be impacted in FY23 by a strong increase in cotton yarn prices at the beginning of the year and a slowing of export demand. The fall in yarn pricing later on is expected to cause a 9–11% decline in the revenues of SMEs in the spinning segment, which are more sensitive to changes in raw material costs.

A large base and weak export demand are expected to cause cotton yarn prices to decline by roughly 15% in FY24. Price realisation will likely suffer as a result.

A reduction in discretionary spending in important consumer markets like the United States (US) and European Union ( EU ) would restrict revenue growth of important export-oriented readymade garment RMG clusters like Tirupur, Bengaluru, and Mumbai to 6–8%.

The domestic market-focused clusters, such as those in Kolkata, Kanchipuram, and Ludhiana, are anticipated to perform better than the export-focused clusters.

While operational profit margins shrank in FY23, players' profitability is anticipated to increase as input cost pressure eases.

Free trade agreements with significant markets and the construction of textile parks under the PM MITRA project would increase India's competitiveness in the RMG sector over the medium term. The Production Linked Incentive scheme, which will support local production, especially in synthetic textiles, will complement this.