The Indian textile industry is well placed to benefit from the adoption of the ‘China + 1’ strategy, says an Edelweiss Securities report. Under this initiative, global manufacturers have started shifting manufacturing operations from China to alternate sourcing destinations, in an attempt to de-risk their supply chain. India can benefit from the China + 1 strategy as it has abundant raw materials, cheaper labor, improving ‘ease of doing business’ and strong manufacturing infrastructure with presence across the value chain.
India is seeing a rise in its market as the US Senate has passed a bill banning China’s Xinjiang Cotton. This has helped it bag orders diverted from the region, adds the report.
Indian textile players have been witnessing higher export orders and are aggressively adding capacities across spinning, processing and garment manufacturing.
JM Financial Institutional Securities, adds, the structural uptick in home textile demand owing to increased ‘work-from-home’ period, higher emphasis on health and hygiene driven by pandemic, duty reimbursement by GOI and market share gain on China+1 theme will drive earnings trajectory going forward. The domestic brokerage house suggests a healthy order book for exporters, given the sharp recovery in US/EU markets. High yarn and cotton prices will enable producers to report strong earnings for 2QFY22, adds the report.
