India’s Textile Sector Set for Growth in FY25
India’s textile sector is expected to see significant growth in the second half of FY25, according to a report by Systematix Institutional Equities. The report highlights that improved demand momentum and volume growth will outpace inventory levels, driven by easing inflation, normalized channel inventory, improving supply chain dynamics, and anticipated cuts in interest rates.
Global Shifts in Supply Chain Strategies
The report notes that global shifts in supply chain strategies, particularly the China +1 policy and the ongoing political crisis in Bangladesh, are prompting global brand owners to reconsider their reliance on Bangladesh. This has led them to explore alternative sourcing options in countries such as India, Vietnam, Cambodia, and Sri Lanka.
Recovery in the Spinning Industry
The spinning industry is showing signs of recovery with moderate improvements in both domestic and export demand. However, the industry faces challenges, especially in exports, due to disruptions in the Red Sea region, which have increased logistics costs.
Financial Performance
Textile companies reported robust financial performance in the first quarter of FY25, with revenue increasing by 18%, EBITDA by 32%, and PAT by 41%. This growth was driven by higher volumes and lower raw material costs. However, rising domestic cotton prices have made the Indian industry less competitive globally.
Positive Outlook
Despite challenges, the outlook for India’s textile sector remains positive, with expectations of continued growth and recovery in the coming quarters as demand conditions improve both domestically and internationally.
Doubts Revealed
Textile Sector -: The textile sector includes businesses that make cloth and fabric products, like clothes, bed sheets, and towels.
FY25 -: FY25 stands for Fiscal Year 2025, which is a one-year period used for accounting and financial purposes. It usually starts on April 1, 2024, and ends on March 31, 2025.
Systematix Institutional Equities -: Systematix Institutional Equities is a company that provides financial research and advice to big investors and businesses.
China +1 policy -: The China +1 policy is a strategy where companies don’t rely only on China for manufacturing but also look for other countries to make their products.
Political crisis in Bangladesh -: A political crisis in Bangladesh means there are serious problems in the government, which can affect businesses and factories there.
Sourcing option -: A sourcing option is a place or country where companies can get their products made or materials from.
Domestic cotton prices -: Domestic cotton prices refer to the cost of cotton grown and sold within India.
Garment sales -: Garment sales mean the selling of clothes and clothing items.
Supply chain dynamics -: Supply chain dynamics refer to how products are made, moved, and sold from one place to another.
Inflation -: Inflation is when the prices of goods and services go up over time, making things more expensive.
