Good tidings for textiles industry as experts see pick-up in production, exports

After experiencing contraction for a year, textile production and exports are trotting back to normal, having got rid of inventory pileup even as stock buildup ahead of Christmas holiday season in the West continues to drive export demand. September marked the third consecutive month of expansion for the industry, and experts expect the growth to sustain in the second half of 2023-24.

“We are expecting a pick-up in production for the remainder of the year. Last year also, the turnaround happened post January,” said a senior official who requested not to be identified.

Textile production grew 3.7% year on year in September, as per Index of Industrial Production (IIP) data released a fortnight ago, outpacing the 1.6% uptake registered in August.

“The industry has bottomed out and is in a revival phase now,” said Sanjay Jain, chairman of Indian Chamber of Commerce’s national expert committee on textiles. “The inventory pipeline that was built up during Covid has now finished, and the Ukraine war is now de-escalated, which is helping the industry improve,” he said. Textile exporters believe the country can post an 8-10% annual jump in exports in FY24.

Enquiries are up 10-20% over last year due to the improving demand scenario in the US, Australia and the UAE, they said. The US is among the largest importers of textiles along with the European Union.”We will sustain this growth because the US had reduced buying due to the war and is now low on inventory,” said Ashok Rajani, founder chairman of Midas Touch Exports. “We expect growth in the next 4-6 months as the feel-good factor is coming back. The order book is 15-20% better than what it was 4-5 months ago,” he said.Exports of cotton fabric, yarn and handloom products were up 5.7% during April-October, compared with April-August period when they were 2% less than last year’s levels, according to data from the Ministry of Commerce and Industry.

Long way to recovery
However, the industry is yet to reach pre-Covid production levels. Although the gap in production from pre-pandemic levels halved from the start of the year, textile production was still 6.5% lower in September compared to the 2019-20 period, according to data from the Ministry of Statistics and Programme Implementation (Mospi).

Many experts believe a complete recovery to pre-Covid levels is a long way away.

“This uptick is a reflection of inventory pile-up for the festive season in western economies,” said Sunil Kumar Sinha, principal economist at Ind-Ra, referring to production and export spurt in September and October.

Long-term recovery would depend on improving global trade conditions, he added.

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