The world of international trading has been grappling with one challenge after the other since the pandemic, followed by the war theatrics Europe. Many sectors had roller coaster rides and are continuing to do so, trying their best to keep their heads above the water. For the Indian textile exporters, October 2022 was no season of festive delight as it experienced a crash of 41.53 per cent year-on-year. Clearly, the worldwide economic slowdown is hitting home big time. With high inflation and energy crisis, Europe is bracing for a winter of discontent. Consumers in the US too are weary as news of a looming recession is compounding on the fears that the pandemic-induced lockdown had gotten.
Figures don’t look good
This October, textile export share in total merchandise export registered at 7.68 per cent compared to 9.72 per cent in October 2021. The Ministry of Commerce & Industry also released some facts to corroborate this decline – whilst India exported textiles valued at $2220.30 million in October 2021, this October it just managed exports worth $1298.34 million. In October 2021, export of manmade yarn, fabrics and other associated products stood at $468.69 million and the same dropped to $350.56 million in October 2022. The most important figure was that in October 2021, $1,335.97 million worth of cotton yarn, fabric and made-ups were exported. This year in October the figure reads nearly half at $719.03 million.
In the last six months leading up to October, the decline has been a steady one of 20.78 per cent year on year, valued at $11348.46 million. If this trend continues, then the textile sector, both export and manufacturing, are bound to face enormous difficulties which in turn would affect local economies on the whole. Experts predict the slow down as imminent and a reality that needs to be addressed. However, some pundits are predicting a comeback as despite the adverse conditions in the US and Europe, markets are slowing picking up strength.
Financial analysts are advising that domestic consumption textile manufacturers will fare better than export-orientated ones in the short term. Figures indicate that giants like Siyaram Silk Mills Ltd., Raymonds and Welspun are gaining strength.
India’s huge festive and wedding season represents hope as many manufacturers are busy establishing robust domestic sales. The other silver linings come in the form of the shifting of manufacturing bases from China to India, the favorably strong US dollar, and Indian government’s lowering of cotton import duties as well as offering production-linked incentive schemes. In fact, the government has set ambitious goals to help bolster textile exports by targeting a total of $100 billion of exports within the next five years and upgrade the total value of the sector as in export and domestic trade between $250 billion and $300 billion.
While India managed to become more cost efficient in terms of cotton production however, thanks to the higher depreciation of currencies in competing countries makes Indian cotton still more expensive. This is a challenging factor as it is stressing out profitability and margins factors and also telling on capacity utilization of plants, which in turn affects the work force.
The upheaval of this nature is challenging indeed and experts are advising a wait and watch strategy up until the release of the Q3 figures of fiscal Y23 are out before considering serious investments or big moves.