Despite a challenging year, Gujarat’s textile industry may not see recovery anytime soon

Despite a challenging year, Gujarat’s textile industry may not see recovery anytime soon

The once robust textile sector of Gujarat clocked a lacklustre performance in the year 2023 on the back of ongoing geo-political crises like the Ukraine-Russia war and Israel-Palestine conflict. Data collated by the government indicates export slump of 8% from $ 5.10 billion in 2022 to $4.69 billion this year.

Not only was the industry unable to capitalise on the recently concluded festive and marriage seasons to improve its fortunes but the continuous uncertainty on the geo-political may further push back the much awaited recovery of the sector for at least another quarter.

“The western countries are still facing the challenge of limited spending capacity. With no resolution in sight for the two major conflicts in Ukraine and Israel, it is unlikely that the demand in the international markets would pick up in the near future”, said Parikh.

Ashwin Thakkar, Vice President, Textile Association of India, said, “The uptick in the domestic retail demand has some signs of recovery but it has been restricted by the changes in spending patterns of the consumers. Surprisingly, the consumers are still preferring to spend more on travel & tourism and personal well being instead of daily use consumption goods like apparel. The share of apparel in the total retail spending (around 17% to 20% ) is being eroded by this consumption pattern.”

Devroop Dhar, Co-founder, Primus Partners, a business and management consulting firm, said, “The demand in the domestic textiles industry has seen positive growth in this financial year as compared to the previous year. In the first half, the sales increased by about 14% compared to the same period last year. But the twin challenges of rising costs and weak demand in the international market are still looming large for us.”

“While total textile export from Gujarat registered a 11.5% growth, almost all of this growth resulted from the export growth of cotton yarn. Total cotton yarn export from the state registered a 28.5% spike and reached to $ 2.23 billion from $ 1.73 billion compared to FY23. Unlike the cotton yarn, the export of man made fibre and ready-made garments slipped down by 7% and 8% respectively.

Commenting on this export trend, Takkar said, “India is struggling to reap the benefits of China+1 policy because our weaving, processing and garmenting industry is unorganised, which increases the production cost and makes our product uncompetitive. In addition, the lower prices of international textile products makes it difficult for Indian manufacturers to compete with international players with cheaper products from China, Bangladesh and Vietnam. Because of this, the Indian denim industry and knitting industry is working at around 50% and 60% of their capacities for several months now”, added Saurin Parikh.

Parikh further said, “To make the situation worse, China is dumping its under-priced products into Indian markets. Underbilling makes these products cheaper than the products being offered by Indian counterparts. Seeing the ongoing conditions in the international markets, the situation may remain the same for at least another quarter. Meanwhile the government should focus on stopping this dumping of textile products from China otherwise the Indian textile industry will lose a lot.”