Home Textiles exports to drop 16-18% in FY23

The sector that saw hype in the FY 21 and FY 22 is expected to record a fall of 16-18% in this FY 23.  This will be accompanied by a slowed demand in European and the U.S. regions.

According to a report by Care Edge Ratings, the costs of materials and well of logistics have been predicted to rise which may further affect the trade.

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After hitting the peak in Q2 FY22, exports started plateauing with a sharp surge in commodity inflation and a global recessionary trend disrupting growth. As per the report, FY22 witnessed exports of USD 44.4 billion (PY: USD 31.5 billion), helped by the pandemic-induced demand and the China+1 strategy of importing nations.

Currently, the European and American markets constitute approximately 68-70% of home textiles imports and a recession there will directly impact the Indian statistics too. Coupled with weak consumer sentiments, product demand, and lower capacity utilization, exports are bound to decline in turnover by 10%-12% in FY23 and margin contraction by 400-500 bps.

“CareEdge expects a 16-18% degrowth in home textile export in FY23, impacted by the recessionary trend in Europe, and cut down on non-essential expenses in the US amid high inflation. While the depreciating rupee against the dollar and China+1 policy across the globe restricts turnover fall for Indian home textile players, margins would contract by 400-500 bps due to lower operating leverage is given lower capacity utilization. Demand momentum should witness gradual recovery from Q1FY24 as freight and cotton costs show moderation and inventory exhausts with retailers”, said Arti Roy, Associate Director.