Textile exports is expected to grow at 6 per cent to USD 40 billion in 2016-17, mainly driven by the expectations of growth in the apparel segment and higher fibre prices, according to ICRA research.
The sector has witnessed a de-growth of 2 per cent in 2015-16, ICRA said in an update on the Indian textile industry.
“Despite volume growth in most of the segments, de-growth in the value of textile exports during 2015-16 was driven by lower fibre prices (cotton as well as polyester).
“For 2016-17, while raw-cotton export is expected to decline, other segments, especially apparels, will see positive volume growth, especially due to improved export competitiveness supported by the recent financial package for the textile industry,” ICRA VP, Corporate Sector Ratings, Anil Gupta said.
ICRA has estimated that apart from the apparel segment, volume growth in textile exports is also expected in other segments like textile made-ups and home furnishings.
The average prices for fibre are also likely to stay higher in this fiscal compared to the previous year, which will support the growth in value of textile exports, it added.
“While the outlook on volume growth is positive in all the segments except raw-cotton, yarn export volumes may also come under pressure due to the recent spurt in domestic cotton prices. This spurt can also partially offset the benefits of the recent financial package for the textile industry,” Gupta added.
Textile exports continued to decline by 6 per cent and stood at USD 5.7 billion for first 2 months in this fiscal against USD 6.1 billion in the year-ago period due to lower fibre prices, it said.
Polyester and cotton prices stood lower by 10 per cent and 4 per cent, respectively till May 2016, which is reflected in the decline in value of exports.
However, with the recent spurt in domestic as well as international cotton prices, the growth in value terms is expected to turn positive in the coming months as the higher input costs will partially be required to be passed on to the buyers, ICRA pointed out.