B&K Securities: Indian textile exports to stay strong

The Indian textile industry is poised for growth in 2024. In the ready-made garments (RMG) sector, a substantial increase in demand from export markets is anticipated for 2024. The domestic market could see a boost in the second half of FY25, supported by an increase in wedding days and festive season.

According to a B&K Securities report, the Indian textile industry is poised for significant growth in 2024, driven by stronger export market demand, robust consumer spending in key sectors, and favorable geopolitical conditions.

The ready-made garments (RMG) sector is expected to see significant improvement in export markets, driven by restocking from Western retailers, higher demand for spring-summer collections, and anticipated interest rate cuts in the US. Although domestic demand may remain moderate due to lower discretionary spending and overstocking from the previous fiscal year, a recovery is likely in the second half of FY25, supported by a rise in wedding days and the festive season.

India’s RMG exports are poised to benefit from stable cotton prices, reliable supply, and a temporary boost from the crisis in Bangladesh, a major global competitor. However, this advantage may be short-lived due to differences in product offerings and Bangladesh’s trade agreements with the European Union. Over the longer term, India could gain as global buyers diversify their supply chains away from China and Bangladesh, particularly as Bangladesh faces challenges like rising wages and the eventual loss of its Least Developed Country (LDC) status by 2029.

The home textiles segment is also on a growth trajectory, driven by strong consumer spending in the US, which accounts for about 60% of India’s home textile exports. India’s market share in the US is growing, aided by the China+1 strategy adopted by major retailers. 

The competitive raw material costs and increased domestic production capacity are expected to maintain India’s dominance in this market. Additionally, ongoing Free Trade Agreement (FTA) negotiations with the UK and the European Union could open up further growth opportunities. However, the industry still faces challenges, such as logistical disruptions due to the Red Sea crisis, uncompetitive domestic cotton prices, and the need to meet evolving sustainability standards in Western markets.

To stay competitive, the country will need to invest in adhering to these evolving norms.