HomeIndustry TrendsPost Covid home textiles industry’s prospects brighten

Post Covid home textiles industry’s prospects brighten

Indian home textile industry was one of the direct beneficiaries (apart from pharmaceutical industry) of the outbreak of Covid-19 in the world. The industry, which is mainly dependent on exports for survival, was passing through rough patch in 2018 and 2019 due to multiple headwinds like Brexit, implementation of GST (resulting in an inverted duty structure) and appreciation of the Indian rupee. However, consequent to outbreak of pandemic, emphasis on hygiene has increased which has resulted in enhanced demand for home textile products. Also, adoption of China plus one policy by various Western countries, for sourcing materials has helped other leading producers of home textiles like India.

Major exporter

India is a major player in the global home textile exports, particularly in cotton-based home textile products and commands 11% market share. India’s dominance in this industry is largely due to multiple competitive advantages that India has over its competitors, which puts it in a unique spot over other competing nations like Pakistan, Bangladesh, and Vietnam.

USA and Europe are largest markets for home textile exporters. Of the two, US is the most preferred market for exporters due to the fact that it’s the largest consumer in the world and its size too is larger than that of Europe. Further, the large proportion of organised retail in the US, and homogeneity in consumer tastes add to the attraction of the market. On the other hand, heterogeneity in consumption due to sharp differences in buying habits makes Europe a difficult market to cater to. Additionally, preferential tariffs given to competing countries like Pakistan and Bangladesh by Europe puts Indian players at a disadvantage.

China’s loss, India’s gain

Though India has 11% market share in global home textile exports, its much less than the largest exporter, that is, China which has a market share of whopping 39%. However, on the positive side, India has steadily increased its market share from 9% to 11%, while China’s growth rate has remained relatively stagnant during the last five years. China’s growth rate is expected to remain subdued due to ‘China Plus One’ trend and ban on Xinjiang cotton. Further, India’s home textile industry has a major advantage in the form of having the entire value chain in the country – right from natural fibre production to processing and manufacturing of finished products – thus, India can capture a good chunk of China’s lost market share.

Presence of unorganised sector

Around 70% of India’s home textile market is unorganized in nature, which offers opportunity for big and organised players to capture market share in this segment as well. Bed linen is the largest product category constituting almost half of India’s home textile market, followed by bath linen and other products like flooring and upholstery.

Cotton prices

Rising cotton prices is a matter of concern for the textile industry in general and for home textile manufacturers in particular. Cotton prices have gone up due to surge in demand post Covid-19 and also government’s decision to hike MSP prices. Even while cotton prices in India witnessed an upward trend, they remained lower compared to the international cotton prices. While the international cotton prices averaged at 134 per kg (in rupee terms), the price of premium variety averaged at Rs.125 per kg during October 2020 – February 2021 period in India.

Shaky short term

However, emergence of second wave has slowed down the sector’s march at least in the short term, especially in the domestic market. The institutional bedding segment has slowed due to the pandemic owing to hotels having lower occupancies or being shut; however, the segment is expected to pick up once the pandemic is under control.

Long term industry prospects

According to Welspun India “Globally, the Homebody economy with focus on hygiene will continue to drive demand for home textiles. Big Box Retailers, Supermarkets and Marketplaces are expected to continue doing well across geographies.”

Because of superior product quality, Indian home textile manufacturers have gained market share in the global market over the last few years. However, India still accounts for only 5% of the global home textile trade, leaving significant headroom for growth. What adds to the confidence of the home textile exporters is the growing preference for India and away from China and the trend is likely to continue if the Indian government incentivises the home textiles industry by making key inputs cheaper and aiding in setting up good infrastructure. Also, the USA’s retail sector has seen an uptick due to quick implementation of pandemic protocols and retailers taking measures to enable e-commerce. So, its good news all around for the sector and it all depends how the India exporters make most of the emerging opportunities.

Subscribe to our newsletter

To be updated with all the latest news from Sawdust

reports

moves

tenders

latest news