After going through a prolonged period of subdued global demand, Indian textile manufacturers in general and home textile makers in particular are witnessing a favourable trend emerging for their products. Of course, they are aided by series of recent events like outbreak of Corona and trade wars which may have long term impact on the industry.
After the supply disruption in early 2020 due to Corona outbreak has forced the global players to reduce their dependence on China to de-risk their supply chain concentration. Further, various human rights violations towards labour associated with the textile industry in Xinjiang region has led to banning on Xinjiang Cotton in USA. It should be noted that 20% of world cotton production is accounted for by Xinjiang Cotton. And trade tensions between USA and China have continued and there are no signs of it abating. All these reasons are leading to a shift in manufacturing operations from China to alternate sourcing destinations, this alteration is known as ‘China + 1’ initiative.
India stands to be the forefront beneficiary of this development as the country’s textile industry possesses similar structural advantages such as cheap labour, abundance of raw material, strong textile manufacturing infrastructure, and government policy support. This shall help Indian home textile exporters gain a share from their Chinese counterparts globally.
Further there is a possibility of removal of Pakistan’s General System of Preferences (GSP) status with EU. The GSP status in the EU allows duty-free access, helping it gain a significant market share against India and China which attract 10% duties. However, EU Parliament is considering the withdrawal of Pakistan’s GSP status to address the abuse of blasphemy laws in the country, providing further scope of growth for the Indian Textile industry.
Meanwhile, India’s share in bed-linen export to the US has improved to 58% from 50% in CY2019, while in terry towel exports, it has improved to 44% from 39% in CY2019. This along with sustained strong demand due to higher focus on home hygiene in the pandemic environment provided home textile companies strong growth levers. China continues to lose ground and saw a 330/270 bps decline in the market share to 11.5%/18.6% over the same period.