The textile sector in India willwitness significant growth in H2, FY25, as per a report by Systematix Institutional Equities.

According to the report, this growth will be driven by an increased demand momentum and volume growth surpassing inventory levels. Some of the key factors contributing to this growth will include easing inflation, normalised channel inventories, improved supply chain dynamics, and the prospect of interest rate cuts.

The report also highlights global shifts in supply chain strategies, particularly due to the China +1 policy and the political instability in Bangladesh, as factors prompting global brands to reconsider their heavy reliance on Bangladesh. This has led to alternative sourcing options like India, Vietnam, Cambodia, and Sri Lanka gaining traction.

While the Indian textile industry has faced export challenges due to disruptions in the Red Sea region, the spinning sector is showing signs of recovery with a moderate increase in both domestic and export demand. Retail demand has remained strong, creating a robust environment in the second half of the fiscal year. Financial performance metrics for textile companies in Q1 FY25 revealed significant year-on-year growth in revenue, EBITDA, and PAT, driven by higher volumes and reduced raw material costs.

However, the industry continues to contend with rising domestic cotton prices that have increased to Rs 58,000-60,000 per candy. This price hike makes the Indian textile industry less competitive on the global stage, particularly due to the decline in international cotton prices. Despite this, garment sales volumes increased by 11 per cent Y-o-Y in Q1 FY25 as demand in global retail industry resurged leading to liquidation of the unsold inventory.