Workers hang dyed yarn for drying under the sun as seen on the National Handloom Day at a textile mill, in Guntur district
Credit: PTI File Photo
Bengaluru: Indian home textiles sector saw its exports peak during the pandemic going up to $7.1 billion in fiscal year 2022. However, this surge was followed by the industry being hit by high costs on several fronts - something it is beginning to emerge from this year.
According to a report by the credit rating agency CareEdge Ratings, the country’s home furnishing business is expected to grow by 8-10% in FY25 and is set on a recovery path.
India ranks a distant second to China in the global market when it comes to home textiles (furnishings). But the country saw a peak at the height of the pandemic when the demand spiked and the West looked past China for its supply. While many industries struggled during covid, home textiles saw a 13% year-over-year (YoY) growth in FY21 to peak in FY22.
However, 2023 saw some of these demands die down and the industry was also hit by cotton prices soaring by Rs 272/kg and the higher freight costs due to rerouting. While this took the wind off the sail of the Indian home textile industry, 2024 is seeing things stabilising.
Going forward, this segment is set to grow, feeding off both a burgeoning domestic realty market built on rising urbanisation and an improving export market. Moreover, as the global economy slowed and demand weakened, cotton underwent a sharp price correction from December 2022. Since then, cotton prices have stabilised between Rs 160-164/kg.
Supported by domestic demand, the six big manufacturers comprising approximately 65% of market share saw significant growth, with their total operating income (TOI) increasing by 10% in FY24, rising from a fall of 8% in the preceding fiscal.
The global market is also witnessing a significant boost, driven primarily by the US market, leading to notable recovery after several quarters of decline. However, China (35%) continues to dominate the export market in USA - the largest importer for home textile, with India (29%) in the second spot.
While recovery is on cards, challenges of increasing freight costs owing to volatile geopolitical conditions perists. While oil prices peaked in 2022 and have fallen off significantly in 2024, the ongoing Red Sea crisis has been a major hurdle, causing Indian exporters to re-route 95% of vessels, leading to a surge in logistics cost by nearly 4-5 times.