Home textiles from India are gaining share in export markets. New capacities and backward integration are expected to help firms like Himatsingka Seide and Indo Count improve profitability and market share. Himatsingka Seide has expanded bed linen capacity and is aiming to commission spinning capacity, which helps in backward integration. Indo Count is expanding bed linen capacity and is planning to build a new plant.
Indo Count expects a 10 to 12 per cent volume growth in financial year 2018. Also Indo Count believes its volume growth has the potential to grow at a higher rate after financial year ’18. Even as the rupee appreciated 3.8 per cent against the dollar in the last three months, and cotton prices rose 20 per cent from a year ago, shares of Indo Count, Trident, Himatsingka Seide and Welspun gained 20 to 40 per cent in the last three months.
However, cost pressures can impact that advantage. Higher yuan depreciation against the rupee appreciation and a reduced cotton price spread between India and China is impacting the Indian advantage. The recently notified duty drawback scheme is expected to provide some cushion, but cost pressures outweigh the benefits from the scheme. If the external environment does not worsen, home textile makers can overcome the current cost pressures with scale benefits.