Dear Friends,

Today’s uncertain times have brought along with them a lot of challenges in textiles manufacturing and trading sentiments around the world. The main cause of concern is the pressure on raw material costs, pricing, and margin recovery on the sales front. Stability in costs of raw material, energy, freight, currency, etc. is imperative for businesses to improve and come back on the rails.

The problem that the industry is facing is that of fiscal issues like inflation, disruptions in the supply chain together with structural changes in consumption, and other issues like the geo-political situation which have led to instability in the market.

Currently, the big retailers and stores are buying only for replenishing their stocks and are not chasing big-ticket sales to the final consumer. However, the exporters are hopeful that with the buying season resuming after the slump, the situation should improve.

Heimtextil 2023

The New Year 2023 began with Indian companies registering a large presence in the Heimtextil 2023 fair for Home and Contract Textiles being held during 10-13 January 2023 at the Messe Frankfurt fairgrounds in Frankfurt, Germany. Unlike the recently held one-time summer special edition in June 2022 with lesser participants, or the pre-covid edition held in January 2020, the present edition recorded an increase in internationalization both in terms of exhibitors and visitors. The fair made a powerful return to its regular January season by setting high business expectations with an overwhelming presence of 129 participating nations. The January 2023 edition witnessed the participation of over 2400 exhibitors from over 120 countries of which 382 exhibitors were from India.

As per official records, 44,000 buyers took advantage of the opportunity to participate in the global market for home and contract textiles and witness global textile innovations across multiple segments from fibers, yarns, upholstery, and decorative fabrics, functional textiles, outdoor fabrics, to bed and bathroom textiles, mattresses, sleep systems, curtains, and decorative cushions. The top ten exhibiting countries were China, India, Turkey, Pakistan, Italy, Germany, Spain, Portugal, France, and Great Britain. The top visitor countries included Germany, Italy, Turkey, the United States, Great Britain, France, the Netherlands, Spain, Pakistan, India, and Greece.

Some of the leading Indian exhibitors stated that they had a lot of meetings at the fair with the international buyers but how much gets converted into business is to be seen. Despite the low-key affairs, international buyers are looking up to India with a lot of enthusiasm and the sector is hopeful of good times ahead.

Budget 2023: Expectations

The textile sector is among those hit hard by the black swan events including the Covid-19 pandemic followed by the ongoing Russia-Ukraine war and its spillovers of high inflation and monetary tightening. The sector continues to remain in the perils of the slowdown in exports amid the downturn in global demand, low domestic demand, and shortage of raw materials including raw cotton.

With an aim to boost the sector, the Government has offered complete value chain support by announcing schemes like the Production Linked Incentive scheme and the commencement of 7 PM MITRA textile parks to help the sector reach an export level of USD100 billion by 2030.

The textile sector, however, has some key expectations from the upcoming Union Budget 2023, to pace up recovery and target growth in the near future. Some of the significant demands by the industry include commissioning an incentive scheme for the textile value chain, the introduction of the Cotton Price Stabilization Fund Scheme to push exports, the replacement of the Technology Upgradation Fund Scheme with PLI type plan, and the issuance of claims for 40,000 pending cases in ATUFS.

Other industry expectations in the form of tax reliefs include the removal of the 11% import duty on cotton, and cotton waste to remain competitive against Bangladesh; restoration of duty-free imports facility against made-up exports, and coverage of cotton yarn exports under 3% interest equalization scheme, amongst others.

The textile industry is hopeful that the government will positively consider their demands, and an announcement will likely follow up in the annual budget.

Indo-Australia Economic Co-operation and Trade Agreement (ECTA)

India’s 70% of textile products and 90% of apparel products face a 5% tariff on export to Australia vis-à-vis competitors such as China, Vietnam, and Bangladesh which have zero duty access.

Indo-Australia ECTA will lead to the elimination of duty improving the prospects for India’s exports of textiles and apparel to gain from US$ 0.5 billion to US$ 1.1 billion in the next 3 years.

Further, additional capacity creation due to exports and re-investment is likely to create additional employment of 40,000 persons per annum.

The Council in this regard is undertaking efforts to promote Trade & Investment and fully explore the potential of Australia as a potential FTA destination for value-added textile exports from India. We have proposed the visit of a high-level delegation comprising stakeholders from the entire value chain during the third week of February to showcase India’s versatile Textile & Clothing sector. We also hope to see Australian buyers visit us at the Ind-Texpo 2023 being organized by the Council in New Delhi on the 22nd and 23rd of March 2023.

Way Forward

Friends, as we move forward in the New Year 2023, we must continue to look for opportunities to increase exports notwithstanding the gloomy times.

The positivity in the previous year’s growth trend and improved fundamentals should help the country in neutralizing the impact of global headwinds to some extent.

On that positive note, let me wish ‘the best to come our way in the New Year 2023!’