India’s textile industry is set to benefit from a combination of global market disruptions, stabilizing costs, and increasing demand from key export markets. A recent JM Financial report highlights how the sector is positioned for growth, with Indian exporters gaining ground as competitors face challenges in markets like Bangladesh and Vietnam.
Global Disruptions Open Opportunities for Indian Exporters
- Bangladesh: Political instability and supply chain disruptions are impacting its textile exports.
- Vietnam: Rising operational costs are driving retailers to seek alternative suppliers.
- India’s Market Share Growth:
- US Apparel Exports: Grew to 7% in 2024 (up from 6% in 2023).
- UK Apparel Exports: Increased to 6% in 2024 (up from 5% in 2023).
Improving Margins and Demand for Indian Players
Indian textile companies are optimistic about the second half of 2024, driven by:
- Festive Demand: Retailers are replenishing inventories as global de-stocking cycles stabilize.
- Cooling freight costs: elevated costs due to peak season and the Red Sea issue are expected to decline, aiding margins.
- Cotton and yarn prices normalize:
- Cotton prices stabilized at Rs 151/kg.
- Yarn prices settled at Rs 232/kg by November 2024.
- Narrowing Cotton Price Spread: The gap between Indian and Chinese cotton prices has reduced, boosting competitiveness.
Key Enablers for Indian Textile Exports
- The UK-India Free Trade Agreement (FTA)is expectedted to ease market access and reduce trade barriers.
- US Market Share in Cotton Sheets: Rose to 61% in 2024, despite earlier challenges like supply chain issues and the Red Sea crisis.
Mixed Global Trends Impact Demand
- Walmart: Raised its 2024 revenue guidance to 4.8%-5.1%, reflecting strong consumer sentiment.
- Nike and Targeexperiencedced softer demand, highlighting uneven trends in global retail.
- TJX: RemaiTJX remainsn home textiles, benefiting Indian exporters.
Stock Market Reaction
The optimism surrounding India’s textile sector has translated into stock gains:
- Gokaldasclosedts: Closed 6% higher.
- Trident: gained 10%.
- Indo Count: Climbed 15%.
- Welspun: ended 5% higher.
Conclusion
India’s textile sector is well-positioned to capitalize on global disruptions and a festive demand surge. With stabilizing costs, improving export competitiveness, and supportive trade policies, the sector is likely to experience sustained growth in the coming quarters.
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