As domestic market cylinder fires and the T&A sector show an uptick in the growth trajectory. The Indian textile and apparel sector has experienced a steadfast recovery & witnessed remarkable resilience which is a good sign in the first quarter of the fiscal year 2025.
Hopefully, we will be in the phase of growth and the government is sitting very optimistic about the prospects of the T&C sector as the sector materialized quite a ground this quarter(fingers crossed).
Qualifying the circumstances which gives us a nose ahead of the competition as scales grow in a limited sense given global trade has been improving in 2024, which does not come as a credit to us.
We cannot single out any particular area that has contributed to this improving sector prospects hopefully things are falling in place and this space is evolving every day, all state governments including the central authorities are supportive as of date, and ease of environment will further help facilitate this space and that is something experts are very excited about.
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Interestingly both the Wazir Textile Index (WTI) and Wazir Apparel Index (WAI) have recorded significant growth, indicating a positive outlook for the industry and this is the sector where maximum jobs are inherently created.
Salient features:
WTI Performance: The WTI sales index rose by 12% in Q1 FY25, supported by a 29% rise in the EBITDA index. Consolidated sales and EBITDA margins for top textile companies also witnessed reasonable growth.
WAI Performance: The WAI sales index experienced reasonably good growth as high as 19%, with a corresponding 13% rise in the EBITDA index.
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Hits & misses; While most apparel companies ratched efforts improving performances appreciably, SP Apparels faced a slight decline in sales.
Macro-Sector Performance:
Consolidated sales and EBITDA for the listed textile and apparel (T&A) companies on the whole rose by 6% and 1 percentage point, respectively, in Q1 FY25.
Furthermore, RSWM and Indo Count led the growth, while Arvind and Filatex faced minor setbacks.
India's T&A Trade: India's textile and apparel exports increased by 5% in Q1 FY25, on the back of a significant rise observed in fiber exports.
It is important to mention here that, imports, however, declined by 7%, with notable increases in home textile imports and decreases in filament imports interestingly.
Downward side
Trade shocks
Geopolitics which is a spot of bother
This is year of elections when many the important countries are going for poll
In the domestic market, we are seeing a K-shaped recovery and in some pockets, we are witnessing consumer downgrading
There are clouds on the horizon in the near-midterm
Factors Driving Growth: Putting foot on the pedal
The simplistic thing is that rising domestic demand is the kicker
Government policies, supportive stances, and initiatives are the backbone of the sector
Increased exports are offering an opportunity
Technological advancements are the cornerstone for the progress of any sector as we write
Future Outlook: The Sector is well on its way
There was a growing concern amongst all which is receding with this turnaround in 1st quarter of FY'25 and thankfully we have a lot on our hands given India is in a sweet spot currently and that offers tremendous potential.
It is not bad from where we started for India's textile and apparel sector (T&C) the positive trendline witnessed in Q1 FY25 only speaks volumes of a promising future, as we move ahead global market continues to defy recession and deflationary pressures. India is a bastion of strength today in the global economy which offers a parallel market in some sense as a buffer.
Continued growth is expected, but challenges that continue to plague the sector such as rising raw material costs and global economic uncertainties must be addressed to sustain this trajectory.
We cannot single out any particular area that has contributed to this improving sector prospects as hopefully things are falling in place and this space is evolving every day all state governments are supportive as of date and ease of environment will further help facilitate/fuel this space and that is something experts are very excited about.
Hopefully, the momentum and velocity to continue unless we do not know what they know. What is talking point is Indian T&A sector is on the cusp of resurgence and government initiatives like Bharat Tex 2025 event can be catalysts to keep the momentum going in the rest of the quarters of FY25 news and, is incrementally positive as the global economy goes into monetary easing for the global demand creation and domestic levers are pro-growth and the government is doing its bit by giving stimulus support.
Where we find ourselves today is that the government also has dry powder ready by unleashing schemes like 'Textile PLI 2.0' and medium-term announcements like 'PM Mitra parks' scattered on a Pan-India basis and, if the domestic economy remains solid the sector will be able to harness these foundational soaps and measures and, let us hope this is an inflection point in the history of Indian textile and clothing sector (T&A).
Though experts stay cautiously optimistic going forward as this unfinished conversation remains unanswered and time only has the answer to how things pan out from here, so let us not read too much out of only one quarter of the Financial year 2025 (FY25).
Be greater chefs than cooks!