Factors such as rupee appreciation, higher cotton prices, higher MSP have affected the textile industry in India. The rupee appreciation affected revenues of textile players as for many of them a major chunk of revenue comes from exports. Rising cotton prices following the pink bollworm infestation in the cotton crops affected margins of major textile players. Cotton prices witnessed volatility of 19 per cent (annualised) and with the physical market size of cotton estimated at around Rs 68,000 crores, the cotton industry faced an annualised price risk of over Rs 13,000 crores.
Players like Vardhman Textiles started hedging on the Multi Commodity Exchange of India to cope up with the persistent volatility in cotton prices. The readymade garment industry is the largest contributor to the country’s textile exports and employs about 12 million people now. The country’s textile industry currently generates about $150 billion in annual revenues — $110 billion from the domestic market and $40 billion through exports. The sector contributes four per cent to India’s GDP, is one of the largest sources of employment generation in the country and accounts for 14 per cent of exports.
India aims at doubling the annual revenue of the textile industry in the country by 2025.