Indian home textile exporters have been caught amid a myriad of challenges of late. This fact was clearly visible in their weak financial performance in the last quarter. While the rupee’s depreciation against the dollar in the recent past could offer some respite to these companies, the near-term outlook for the sector as a whole is far from promising.
There are many reasons for this like stiff competition from other home textile exporting nations such as China, Vietnam, Pakistan and Turkey is expected to continue. Barring the yuan, currencies of other countries currently trade at a steep discount to the dollar. The rupee is on a much stronger footing versus currencies of most developing nations. Further what adds to the Indian companies’ woes is the relatively low electricity, labour and fixed overhead costs in competing countries. Consequently, it can be hard for India’s home textile players to compete against foreign counterparts in terms of gaining market share in the US. Also, cotton prices have been on an uptrend in India since quite some time, and no price respite may be visible in the foreseeable future. According to the Cotton Association of India, cotton production is likely to decline by 3-4 percent this year to 350 lakh bales.
Meanwhile, in the US, which is the biggest market for home textile exports from India, financial position of some offline retailers hasn’t been too encouraging. This is predominantly because of heightened threat from e-commerce players out there, which has forced many outlets to shut shop and file for bankruptcy. As a result, demand for home textile products from their end may remain sluggish for quite some time.
The only way out for the home textile exporters is going for backward integration by manufacturing yarn and fabric, increasing existing product manufacturing capacities, adding capacities to manufacture new products, saving power costs, facilitating technological up gradation, undertaking equipment maintenance or a combination of these. Diversification of market is also the need of the hour, given the high degree of dependence of the Indian home textile companies on the US market.