Primary growth Leverages
Sustained demand dynamics: New orders in the pipeline, particularly in the services sector, are on the rise.
Global demand: The supportive demand environment for Indian textiles is propelling significant export growth.
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Although the sector is posed with varied challenges: Clouds on the Horizon
Persistent inflation (rising input costs): The price inflationary pressures of key inputs like cotton, leather, and rubber are increasing, which is a spot of bother.
Durable inflationary pressures: Rising food and wage costs are compounded by durable inflationary trends, are eating into profit margins, and are biting and impacting consumer spending where they tend to titrate and downgrade on consumption.
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A Cautious optimism: A balancing act
While the overall outlook for the textile sector remains positive despite the challenges mentioned above and is expected to smooth over time given the economy's solid macro-fundamentals, it's vital to navigate these challenges effectively.
The government continues to arm hold and support job creation; driving continued innovation will be supportive/crucial to sustaining the sector's growth trajectory over time.
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HSBC's Pranjul Bhandari, Chief India Economist, underpinned the critical need to monitor inflationary pressures closely and are deterrents that threaten to dampen the sector's momentum as we move ahead.
The underlying thesis is that, considering the sector has shown resilience by carefully managing costs and adapting to changing market conditions, India's textile industry can continue to be a growth engine for the nation's economic growth.