With the global macroeconomic shifts favouring India, the country is on its way to surpass its key rivals, Vietnam and Bangladesh in the textile sector, as per reports furnished by the Systematix Research. The reasons cited for such a shift include rising labour costs in Vietnam and political instability in Bangladesh.
However, the reports also pointed out that the short-term outlook for the textile sector remains bleak with the ongoing tariff uncertainties that could compel the exporters to bear the extra cost, which is predicted to squeeze profit margins. Resultantly, the companies are expected to transfer a large part of these costs to consumers, which can lead to prices of apparel and textile prices shooting up and a decline in demand from major markets like the USA.
Even with tariff fluctuations, the report suggested that India will become the leading sourcing destination for global players with the normalisation of channel inventories at the global retailer level and hindrances in the neighbouring countries like China, which is predicted to incur high tariff costs as raised by the USA.
But amid positive growth, the report also added muted performance by the Indian companies in the fourth quarter of FY25. The report mentioned that textile companies’ profit after tax showed as little as 3 per cent growth and the EBITDA declined by 3 per cent as well, mainly due to tariff instability and tepid volumes. However, the report stated improvement in the margins of spinning companies with a 10 per cent year-on-year (YoY) margins and the garment sector was also reported recovering with a 10 per cent increase in sales volume on YoY basis.
Further, as per the report, the stability in cotton prices and dedication to enhance operational efficiency is likely to encourage profitability in the textile sector of India.
