After declining by about 2 per cent last year, textile exports are expected to increase by 6per cent year-on-year (y-o-y) to $40 billion in 2016-17 (FY-17). Higher fibre prices and expectations of growth in the apparel segment would lead to higher exports in FY-17, according to ratings agency ICRA.

For the second consecutive year, the estimated exports for FY-17 would fall short of the target and would almost be at the same level in value terms when compared to that of 2014-15. The government has fixed $50 billion as the export target for F-17. An earlier milestone was achieved in 2014-15 when textile exports fetched $40 billion.

Textile exports continued to slip by nearly 6per cent on a y-o-y basis and stood at about $5.7 billion in April-May this year. Exports stood at about $6.1 billion for the same period the previous year and around $6.4 billion in April-May 2015. Polyester and cotton prices were lower by 10per cent and 4per cent respectively (in dollar terms) till May this year.

According to ICRA, however, with the recent rise in domestic as well as international cotton prices, the growth in value terms is expected to turn positive in the coming months as the higher input costs will partially be required to be passed on to the buyers.

As per Anil Gupta, VP, corporate sector ratings ICRA, despite volume growth in most of the segments, de-growth in the value of textile exports during FY-16 was driven by lower fibre prices (cotton as well as polyester).