India's textile sector eyes growth amid rising cotton costs.

Systematix Institutional Equities forecasts a positive outlook for India's textile sector in the second half of FY25, driven by improved demand, easing inflation, and global supply chain shifts. Despite challenges, the sector is expected to see strong revenue growth, EBITDA, and PAT, bolstered by lower raw material costs.

The report underscores global shifts in supply chains, influenced by the China +1 policy and instability in Bangladesh, leading global brands to consider India as a key sourcing hub. However, rising domestic cotton prices, now at Rs 58,000-60,000 per candy, pose a significant challenge. This rise in prices has made Indian textiles less competitive internationally, especially as global cotton prices have declined.

The spinning industry is beginning to recover, with moderate improvements in both domestic and export demand. Retail demand remains robust, contributing to an 11 per cent year-on-year increase in garment sales volumes in Q1 FY25. Despite the hurdles posed by cotton prices, the overall outlook for India's textile sector remains optimistic, with expectations of continued growth in the upcoming quarters.