07 May 2023, Mumbai
India has long been the textile and garment sector leader, but the industry temporarily suffered from the worldwide pandemic between 2020 and the beginning of 2021.
Snapshot
India seized the positive and healthy demand in domestic and international markets with only a little push amid the world economy's recovery.
The same is evident in the most recent statistics made public by prestigious textile and garment businesses and through official channels.
According to one industry report on the performance of the Indian textile and apparel industry (T&C) for the past several months, the growth narrative continues through the conclusion of FY '23 despite of cloudy global economic outlook.
Quick data points
According to the Ministry of Commerce and Industry, India's textile and garment sector (T&A) experienced the highest-ever export rise, by 40.55 percent to US$43.44 billion in FY'22 from US$30.90 billion in FY'21.
In terms of overall numbers, ready-made clothing exports in FY 22 totaled US $ 16 billion, up 30.40% from FY 21.
Notably, the fourth quarter of 22/Q4FY23 proved to be a catalyst for expanding Indian Apparel/garment factories. They recorded US $ 4.81 billion in export revenues or an 18.11% Y-o-Y increase.
If the clothing and textile sectors (RTW) combine, the rise is considerably more significant due to the buoyant domestic demand for raw materials when the inflationary pressures have byfar eased and the supply side is broadly stabilized post-pandemic.
The global market scenario
Leading from the front, Indian public limited companies across the supply chain, including Siyaram Silk Mill, Gokaldas Exports, KPR Mill, and Welspun, as well as other public limited entities like PDS Ltd., Raymond, and Maral Overseas, including apparel groups such as KKCL, Cantabil Retail Ltd results showed optimism having demonstrated positive results in the recently ended Q4 of FY '23, as well as for the entire financial year.
Happy reporting; Additionally, some companies experienced phenomenal growth on the top and bottom lines.
The fascinating thing is that the apparel/clothing segment fared exceptionally well for a few vertically integrated corporations.
Exports perspective
From an export perspective, the major garment retail markets in the world, including the USA, Europe, Australia, Japan, and South Korea, had shown Y-o-Y growth in 2021 over 2020, which benefited Indian factories with an export focus.
Although for FY23 global outlook is not as promising given that the global demand environment continues to be challenging, the silver lining is China plus one/shifting global supply chains continues to be a fundamental tailwind for Indian Apparel exporters and strong backing of the domestic market provides a strong base case to the sector, so semblance is demand is holding out for the industry.
Tailwinds
Consumer interest in omnichannel commerce has been strong for the chosen stores. apparel and accessories store sales allegedly increased by 33.1% during the holiday season, above projections for growth of 14.1% to US $ 886.7 billion.
The most recent quarters have seen strong results from various international brands and shops.
The National Retail Federation (NRF) recently stated that despite CPI/inflationary forces consumers spending hasn't dented as per its study conducted way back in April '22, exports also have not really got seriously impacted supporting the claim that the USA (given that it is biggest import destination exports market for Indian Apparel exporters) continues to experience better than expected strong demand.
Thus, despite higher prices, apparel/clothing retail sales in the US increased every month compared to March 22.
Other countries and their industry scenario
Similarly, Australian retail sales on February 22 again exceeded expectations. Comparing February to January, the clothes and department store sectors both saw increases of over 11%.
The Australian Bureau of Statistics (ABS) notes that in March 2022, the total Australian retail turnover increased by 1.6%, setting a new record. Vertically integrated companies with access to the home and international markets also benefit from solid demand.
Cautious optimism
The same is confirmed by Arvind Ltd., which also notes that fabric and apparel volumes were high in both local and international markets.
Consider Raymond Ltd., which experienced its highest-ever revenue and profitability in its textile and clothing operations during Q4 of FY '22.
Bottomline
The importance of apparel in the quarter reached an all-time high, and the volume of fabric remained stable.
Even in the domestic retail sector, the apparel category continues to grow. Since the second half of CY '21, Indian fashion merchants have seen more substantial sales revenues, which has encouraged them to move through with stalled plans for store openings.
The domestic textile and garment industries have profited from this trend as they experience improved profit margins.
Winsome Lose Some; China plus one strategy China plus two strategies China's supply chain alternate plans All of the above led to several companies/supply chains re-aligning/recalibrating giving way to businesses having migrated their manufacturing plants from China to other credible sourcing hubs such as south Asia, Southeast Asia, Africa, and where not.
