India’s textile revival in FY25 gets a boost from stable cotton, rising RMG exports

India’s textile industry is expected to rebound in FY25 after two years, pushed up by stable cotton prices, improving readymade garment (RMG) exports, and steady domestic demand. The recovery bodes well for small and medium enterprises (SMEs), which form 80 per cent of the textile value chain.

In FY24, a 25 per cent drop in cotton prices and weak RMG exports hurt industry revenue despite stable domestic demand. This year, while domestic cotton yarn demand may slow slightly, stable prices will support overall growth. However, cotton yarn exports are expected to decline as Chinese demand stabilizes.

The main growth driver will be RMG exports, projected to rise 10-12 per cent, supported by restocking by Western retailers and strong discretionary demand in the US and EU. Domestic RMG demand is set to grow 3-4 per cent, with stronger recovery in the second half. However, garment prices are likely to remain flat or see a marginal 1 per cent increase.

On the supply side, domestic cotton prices face slight upward pressure due to lower production and higher minimum support prices, while global prices are under pressure from increased production. This has resulted in domestic cotton trading at a premium. Export-driven clusters like Tirupur, Bengaluru, and Gurugram are set for faster growth, while domestic-focused hubs such as Kolkata and Ludhiana may see slower expansion. Profitability is expected to improve, aided by stable cotton prices and government initiatives, including free trade agreements and production incentives.