The uncertainty prevailing in the Textile and Apparel sector in terms of demand and operational profitability is transitory in nature. Our nation's vibrant domestic consumption will support demand along with revival of volumes in exports - Prabhu Dhamodharan, Convenor, Indian Texpreneurs Federation (ITF).
Coimbatore: Presently, the uncertainty and challenges in terms of demand and operational profitability faced by the Textile and Apparel sector is a result of a Bullwhip effect -- high inflation, higher inventories in developed markets, commodity price correction, tightening of liquidity and, funds moving out of commodities magnified the trend and all these factors are transitory in nature", said Prabhu Dhamodharan, Convenor, Indian Texpreneurs Federation (ITF).
According to a release from the Convenor of ITF, "Unlike in developed markets, Indian retail inventories are low, and with festival season approaching, domestic demand for Yarn and Fabric will emerge strongly from this July end.
Due to falling price trend in raw materials, entire manufacturing value chain has exhausted its inventories. Now and there are strong signals that buying will re-appear.
Market updates on online and offline, retail trends in June indicate that there is a continuity in demand. We witnessed a brisk buying of goods in the past cycles after cotton prices stabilized.
Across the value chain, there is considerable utilization drop from the month of May particularly in yarn and fabrics, this low supply trend will create a favorable demand trend in the upcoming cycle.
Even after accounting for the inflationary trend, fashion domestic consumption will grow nominally due to expansion of GDP & opening up of the economy. We believe that the current size of $ 85 Billion will expand at least by 5 to 7% in this year.
On the exports front also, our interaction with international buyers indicates that once the inventories are reduced with current discount sales, buyers will come back with pre covid level of orders in the coming months.
US Data for May indicates strong import trend. US Imported Rs 66000 Cr worth of Apparels in May, which is higher by 5% compared to the previous 3 months’ average. Reduction in freight & raw material cost will also help in boosting overseas demand for textiles.
Medium term outlook is good for our Textile exports mainly due to the continuous challenges emerging in China, one of the major producing countries. Buyers are steadily expanding their sourcing base to India.
So, we as an industry need to face the current challenges together and continuously focus on building competitiveness. Demand will bounce back very soon", the release noted.