It could boost India’s export revenues by $300 to $400 million per month
MUMBAI: With political uncertainty looming in Bangladesh, the Indian textile industry is positioned to benefit significantly. As one of the major global players in the sector, India stands to gain from the disruption in Bangladesh’s textile industry, which faces challenges due to the ongoing political turmoil.
Textile exports are a crucial source of foreign exchange for Bangladesh, and the sector is likely to be severely impacted by the current instability.
Industry experts suggest that if India captures even 10 to 11 percent of Bangladesh’s export market, it could boost the country’s export revenues by $300 to $400 million per month. The Tirupur textile clusters are expected to be the main beneficiaries of this shift.
Government investments, rising domestic demand driven by increasing disposable incomes, and the growing popularity of fast fashion are expected to provide significant momentum to the Indian textiles and apparel industry. These factors could offset the slowdown in demand from key markets, according to analysts.
India facing tough challenges in global markets
Currently, the UK imports $24 billion worth of apparel, but India’s share is only $1.4 billion, compared to $4.5 billion from Bangladesh and $6.2 billion from China. Indian exporters face tariff disadvantages compared to Pakistan, Turkey, and Bangladesh. However, a potential Free Trade Agreement (FTA) with the UK could allow for duty-free exports, enhancing India’s competitiveness.
The global demand outlook for 2024 is expected to be stronger than in 2023. Indian home textile and apparel exporters anticipate improved demand in the coming quarters, particularly if global retailers’ inventory positions normalize. Analysts from JM Financial Institutional Securities suggest that the recovery in export demand is likely, supported by positive demand guidance and expected order increases.
The extended growth prospects over the next three years, driven by upcoming FTAs, the ‘China+1’ strategy, and government support through rebates and production-linked incentives, present a favorable scenario for the Indian textile sector. Additionally, deflation in commodity prices, such as cotton, supports a positive earnings trajectory for FY25.
Textile shares in limelight
On Tuesday, textile, garment, and apparel stocks saw brisk buying, with some stocks rallying up to 11 per cent on the National Stock Exchange (NSE) in intra-day trade, driven by expectations of earnings improvement.
Notable gainers included Gokaldas Exports, up 11 per cent to Rs1,022, RSMW, up 10 pe cent to Rs254.10, Kitex Garments, up 8 per cent to Rs227, Faze Three, up 8 per cent to Rs558.50, GHCL Textiles, up 8 per cent to Rs119.50, Indo Count Industries, up 5 per cent to Rs395.50, KPR Mill, up 4 per cent to Rs861.05, and Arvind, up 3 per cent to Rs382.85. In comparison, the Nifty 50 index was up 1 per cent at 24,295.75 at 09:41 am.
