Indian Textile Sector On Steady Growth Path With Improved Demand & Supportive Policies: Report

New Delhi, Feb 19 (KNN) Despite domestic cotton prices remaining higher than international prices, the Indian textile sector is witnessing an improvement in demand, according to a recent report by Systematix Institutional Equities Research.

The report highlights key global and domestic factors that are shaping the industry's outlook.

The demand scenario appears strong, driven by multiple factors, including normalising inventories at global retailers, a potential tariff hike by the US on Chinese imports, rising labour costs in Vietnam, and ongoing political instability in Bangladesh. These factors position Indian textile manufacturers favourably in the global market.

However, the report raises concerns about the capacity constraints of Indian garment manufacturers, which may limit their ability to fully capitalize on the rising demand.

Despite this challenge, Indian textile companies are expected to improve profitability in the coming quarters, aided by stable cotton prices, favorable foreign exchange rates, and enhanced operational efficiency.

Indian textile firms reported a healthy year-on-year (YoY) performance, with an 11 per cent revenue increase, 11 per cent EBITDA growth, and a notable 28 per cent rise in profit after tax (PAT).

The decline in cotton prices by 10 per cent YoY and stable yarn prices contributed to gross margin expansion for spinners.

The Union Budget 2025-26 aims to strengthen the textile sector with initiatives focused on cotton productivity, duty restructuring on fabrics, and incentives for domestic manufacturing.

The government's allocation for the textile sector increased to Rs 52.7 billion from Rs 44.2 billion in the previous budget, further supporting growth through the Productivity Linked Incentive (PLI) scheme and sustainability initiatives.

Meanwhile, the Cotton Association of India (CAI) revised its cotton production forecast for the 2024-25 season downward by 7.8 per cent to 30.17 million bales, while the ICAR-Central Institute of Cotton Research (CICR) estimates a higher production of 32.0 million bales.

Although international cotton prices have declined to USD 0.67-0.68 per pound, Indian cotton prices have firmed up to Rs 54,000-55,000 per candy.

The expected stable cotton crop is likely to keep prices within a predictable range, ensuring cost stability for textile manufacturers.

With an improving demand outlook and supportive policy measures, the Indian textile industry is poised for steady growth in the coming quarters.

(KNN Bureau)