Summary:

According to ICRA, Indian clothing exporters are predicted to expand revenue by 9-11% in FY25, owing to lower retail inventories and a shift in global sourcing to India. The long-term outlook remains bright, thanks to improved product acceptability, changing consumer habits, and government efforts such as the Production-Linked Incentive (PLI) program and prospective free trade agreements with the UK and the EU. This growth follows a poor FY24, which was hampered by excessive inventories and low demand.

ICRA anticipates a rebound in demand, resulting in higher capital expenditure in FY25 and FY26, amounting to 5-8% of turnover. After a 2% dip in FY24, Indian garment exporters could recover in FY25 by addressing inventory needs in the United States and Europe. However, demand uncertainty and a slow macroeconomic environment present obstacles. Operating margins may fall by 30-50 basis points YoY in FY25 due to increased costs. Geopolitical challenges in Bangladesh may enhance India's competitiveness through capacity growth.

Source: IBEF 

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