Indian Apparel Exporters To See 9-11% Revenue Growth In FY25: ICRA Report

New Delhi, Oct 22 (KNN) Indian apparel exporters are projected to achieve 9-11 percent revenue growth in fiscal year 2025, according to a new report from ratings agency ICRA.

This expansion is expected to be driven by the gradual reduction of retail inventory in key markets and increasing global sourcing shifts toward India.

The forecast comes after a challenging FY24, during which exports were hampered by high retail inventory levels, weak demand in key markets, supply chain disruptions including the Red Sea crisis, and intense competition from neighbouring countries.

Despite these setbacks, ICRA sees favourable long-term prospects for Indian apparel exports, supported by growing product acceptance, evolving consumer preferences, and government initiatives including the Production-Linked Incentive scheme and pending free trade agreements with the UK and EU.

ICRA Senior Vice President and Co-Group Head Corporate Ratings Srikumar Krishnamurthy notes that while the industry is benefiting from customer de-risking strategies and inventory replenishment in the US and EU markets, challenges persist due to demand uncertainty in some key markets amid broader macroeconomic and geopolitical concerns.

The agency predicts operating margins will narrow by 30-50 basis points year-over-year in FY25, despite revenue growth and softer raw material costs, due to rising labour and freight expenses.

Capital expenditure is expected to increase to 5-8 percent of turnover in FY25 and FY26.

Recent geopolitical tensions in Bangladesh could lead to capacity expansion in other countries, including India.

However, Bangladesh maintains competitive advantages through lower labour costs and preferential duty access to US and EU markets due to its least developed country status, which continues for another two years.

The implementation of initiatives such as the PM Mega Integrated Textile Region and Apparel scheme, alongside the PLI scheme, is expected to strengthen India's position in global apparel trade by providing scale benefits and enhancing the country's presence in man-made fibre value chains. These programs are anticipated to help Indian apparel exporters capture a larger share of the global market.

(KNN Bureau)