|
India's textile industry could be entering its strongest opportunity in decades as global apparel sourcing shifts away from China, with tariff parity, improving trade access and policy support potentially enabling Indian manufacturers to capture a larger share of the global market, according to brokerage firm Nuvama Institutional Equities.
Nuvama said the global textile industry, valued at around USD 1.6 trillion, is a mature market growing at only 2.5-3.5 per cent annually. The opportunity for India is therefore not primarily driven by higher global consumption, but by a reallocation of existing sourcing volumes. China's share of US apparel imports has halved over the past decade, leaving around 20 per cent of the US market share to be contested by alternative suppliers including India, Bangladesh, Vietnam, Pakistan and Indonesia. According to Nuvama, India enters this contest without the structural handicap it faced in previous decades. All major producing economies excluding China are now broadly on a level playing field in terms of tariffs, while India's trade access is also improving. The India-UK CETA, which came into force on July 15, is expected to improve access to the UK market, while negotiations for an India-EU FTA could provide another major opportunity. Nuvama noted that India's share of the European Union apparel market has remained around 3 per cent for a decade, compared with 16.7 per cent for Bangladesh, suggesting significant room for Indian exports if trade access improves. The brokerage firm also pointed to a normalisation of US retail inventories. US retail sales rose from USD 5.3 trillion in FY19 to USD 7.2 trillion in FY24, representing a 6 per cent CAGR, while retailers simultaneously reduced inventories. With inventory ratios now normalised, ordering activity has resumed, potentially supporting textile exporters. However, India still faces structural challenges. The country has a large cotton crop and one of the world's biggest spinning bases, but remains heavily dependent on cotton while global fibre consumption has shifted towards man-made fibres (MMF). India has also historically lagged in garments because of higher labour costs, fewer trade advantages and a fragmented manufacturing structure. Nuvama said policy initiatives, including PM MITRA parks, are aimed at improving integration and scale, while policy support for garments, MMF and technical textiles could help India move further down the value chain. The brokerage firm cautioned that risks include a reversal of US tariff arrangements, delays to the EU FTA, cotton-price volatility, Chinese MMF overcapacity bypassing trade barriers and execution risks related to large announced capital expenditure. (ANI)
|
