New Delhi
Indian apparel exporters are projected to achieve a revenue growth of 9-11% in FY25, driven by the gradual reduction of retail inventory in key markets and a shift in global sourcing to India as part of a de-risking strategy by various customers. This outlook was presented in a report released on Monday.
The revival in demand is expected to lead to increased capital expenditure (capex) spending in FY25 and FY26, projected to be around 5-8% of turnover. Long-term prospects for Indian apparel exports remain favorable, bolstered by enhanced product acceptance, evolving consumer trends, and government support through initiatives such as the Production-Linked Incentive (PLI) scheme and proposed free trade agreements with the UK and the EU.
The PM Mega Integrated Textile Region and Apparel scheme is also anticipated to strengthen India’s position in the global apparel market by providing scale benefits and enhancing the country’s role in the man-made fiber value chain. In the first half of the current fiscal year, apparel exports increased by 9% year-on-year, totaling $7.5 billion.
ICRA analyst Srikumar Krishnamurthy noted that following a slight decline of 2% in FY24, Indian apparel exporters are poised for significant revenue growth in FY25. However, despite this growth, operating margins are expected to contract by 30-50 basis points year-on-year due to rising labor costs, freight expenses, and other operating costs.
The report also highlighted that geopolitical tensions in Bangladesh could lead to capacity additions outside the country, including India.
