PRETTY YARN FINE

Union Budget 2023 focuses on increasing India's production and export of textiles

The textile industry is expected to experience substantial growth and advancement in FY24, owing to the Union Budget's massive support to the sector, advancements in technology, and evolving consumer trends.

One of the oldest sectors in the country, India's textile sector is diverse, with traditional hand-spun and hand-woven textiles on one end and capital-intensive, sophisticated mills on the other. The industry's key advantage is its robust production base, which includes a broad range of fibers and yarns, from natural to synthetic and man-made.

STABLE OUTLOOK FOR FY24

Despite concerns of a potential global economic crisis triggered by the collapse of Silicon Valley Bank and its impact on other financial institutions, the textile sector in India is expected to experience stable growth in fiscal year 2023-2024, according to experts.

However, inflationary pressures and uncompetitive prices have caused a decline in revenue and margins for Indian cotton spinners over the past few quarters.

Revenue decreased by around 4% year-on-year, while margins moderated by 950 basis points, and pressure on profitability has led to a moderation in interest cover for companies across different scales. The impact is particularly harsh for smaller players, as large-scale companies benefit from cost savings on bulk purchases of raw materials.

The textile sector is a critical part of the Indian economy, accounting for more than 2% of the total GDP and over 12% of the manufacturing sector's GDP. It is also the second-largest provider of employment in India after agriculture, with approximately 45 million people employed directly and another 60 million employed indirectly through related activities.

The sector is known for its highly labour-intensive nature, employing unskilled and semi-skilled workers and providing significant employment opportunities for women, said experts.