Textile sector to grow at 6% to $40 billion in FY2017

After witnessing a degrowth of 2 per cent in FY2016, textile exports is expected to grow at 6 per cent to $40 billion in FY2017, driven by the expectations of growth in the apparel segment and higher fibre prices, says ICRA in its research update on the Indian textile industry.
According to Anil Gupta, VP, Corporate Sector Ratings, ICRA Ltd: "Despite volume growth in most of the segments, degrowth in the value of textile exports during FY2016 was driven by lower fibre prices (cotton as well as polyester). For FY2017, while raw-cotton export is expected to decline, however, other segments, especially apparels, shall see positive volume growth, especially due to improved export competitiveness supported by the recent financial package for the textile industry."

As per ICRA estimates, apart from the apparel segment, volume growth in textile exports is also expected in other segments like textile made-ups and home furnishings. The average prices for fibre are also likely to stay higher in FY2017 as compared to the previous year, which will support the growth in value of textile exports.

"While the outlook on volume growth is positive in all the segments except raw-cotton; however, yarn export volumes may also come under pressure due to the recent spurt in domestic cotton prices. This spurt can also partially offset the benefits of the recent financial package for the textile industry," Mr Gupta adds.

Polyester and cotton prices stood lower by 10 per cent and 4 per cent respectively (in US$ terms) till May 2016, which is reflected in the decline in value of exports. However, with the recent spurt in domestic as well as international cotton prices, the growth in value terms is expected to turn positive in the coming months as the higher input costs will partially be required to be passed on to the buyers.