India is the world’s second-largest exporter of textiles and apparel with a massive raw material and manufacturing base. The textiles and garment industry in India is a significant contributor to the economy, both in terms of its domestic share and exports. It contributes about 7% to industry output, 2% to the GDP and 15% to the country’s total export earnings. The sector is one of the largest job creators in the country, employing about 45 million people directly and 60 million people in allied industries.
After being hit hard by COVID second wave, India’s textile industry is well on course on the road to recovery. During the pandemic, the domestic textiles and apparels industry slumped to US $75 billion after peaking at US$ 106 billion in FY2020.
The monthly average of apparel exports of India was $1.14 billion in Q4 2020, which increased by 9.30 per cent to $1.25 billion in H1 2021. It is expected to rise further by 20.02 per cent in H2 2021 to reach $1.50 billion. As for the textile exports of India, the monthly average went from $0.99 billion in Q4 2020 to $1.28 billion in H1 2021, rising by 29.42 per cent. It is expected to escalate further by 14.18 per cent to $1.47 billion and total export of textiles and apparel are expected to touch US$ 82 billion by 2021 However, Indian apparel and textile exports are expected to increase further in the coming months due to various global factors such as increasing demand for the festival season in the western region, sanctions on China’s Xinjiang by the US, UK and EU, and reduced production capacity and exports share of China and Vietnam due to power outages and COVID-19 waves, respectively.
Coal prices in China are on the rise due to tight supply, toughening emissions standards and strong demand from the industry, causing power rates to rise by more than 30 per cent. This further escalated production costs and selling prices.
Exports of cotton and cotton products from India have been rising continuously due to higher international cotton prices compared to the prices of Indian cotton. The US ban on Xinjiang cotton has further supported the demand for cotton from India.
Moreover, shipping and logistics costs have also been rising consistently. The production and exports from Vietnam have depleted due to social distancing measures in the country and a shortage of labour amid COVID-19.
Many buyers are expected to shift to new suppliers due to all these factors and the Indian government initiatives to bolster the sector have raised hopes of the sector growing to $300 billion by 2025-26, a growth of 300% in next 2 years.