As per International Monetary Fund, due to the lockdown in India and reduced buying by the world’s largest textile importers, such as the European Union and the United States, textile exports by the country have declined 80-90 per cent in April. Overall, these textile exports, which contribute about 25 per cent of total demand, are expected to decline by 30-40 per cent this fiscal owing to the global economic slowdown.
Domestic demand for RMG is also likely to decline on account of lower income levels, postponement of weddings and personal events, and reduced festive activities this fiscal year. Small and medium enterprises (SMEs) command a 30-40 per cent share in the total readymade garment market of about Rs 4.8 trillion. Similarly, demand for the home furnishings segment is expected to decline. However, the segment is expected to recover sooner than garments, on account of the upcoming monsoon and winter seasons.
In home furnishings, the demand for products such as bedsheets, blankets, and towels will be relatively better, compared with discretionary items such as curtains and home decor. In addition, historically better financials (operating margins, gearing and interest coverage ratios) of home furnishing companies, as against other segments of the textile value chain, will also provide relief in these tough times.
