Home Textile exporters in uncertain territory

Home Textile exporters in uncertain territory

Hope that Coronavirus outbreak in China would divert orders for home textiles from that country to India may not come true as the manufacturers in China have already resumed their production and shipments have started from their ports. However, according to some exporters, February and March have seen higher than expected demand as the retailer world over stocked more than average this year and absence of Chinese players during those two crucial months might have helped the Indian exporters to increase their market share.

Incidentally, in January 2020, India’s market share in home textile exports to the US (which includes all products) increased 5 percentage points on year on year basis to 36%. In dollar terms, on a monthly basis, India’s market share in cotton sheet exports to the US increased 8 percentage points on year on year basis to 56%, while market share for towels increased 5 percentage points on year on year basis to 41%. In January 2020, cotton sheet/terry towel exports (in dollar terms) increased 2.5%/0.4% year on year basis. Cotton sheet volumes witnessed a strong growth of 6% year on year basis in January 2020, while terry towel volumes declined 12%.

On the positive side, domestic cotton prices have seen 7% decline in new arrival season starting October 2019. The decline in price is likely to benefit the home textile manufacturers.  USDA projects 2019-20 global cotton production to increase by 1.6% YoY to 26.2mn tons, driven by 14.3/10% YoY production growth in India/US.

Further, the recent decision of the government to continue Rebate of State and Central Taxes and Levies (RoSCTL) from 1st April, 2020 onward has temporarily ended the uncertainty surrounding the export incentive. Now RoSCTL will continue until such time that the scheme is merged with Remission of Duties and Taxes on Exported Products (RoDTEP).

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