Indian textile producers are witnessing initial signs of a demand slowdown as high energy and food prices have weakened demand for products such as curtains and bedspreads in the top export markets of the US and Europe, says Upendra Prasad Singh, Textiles Secretary.
Due to high inflation in the US, demand has slowed, especially for home textile products as it is more price-sensitive than apparel and garments, Singh adds
The latest readings of manufacturing and services activity indicate that the economic outlook is darkening in the US and Europe. High energy costs because of the war in Ukraine, supply-chain disruptions because of pandemic-related lockdowns in China, surging commodities prices, and rising interest rates are increasing the risk of recession.
Japan’s Nomura said the US and EU could enter recession in the next 12 months as there are increasing signs of the world economy entering a synchronized growth slowdown", and that countries can no longer rely on a rebound in exports for growth.
India’s exports, too, have begun moderating on a sequential basis after touching a record high in FY22. Meanwhile, a sharp surge in oil and gold imports has pushed the nation’s trade deficit to a record in June. SachchidanandShukla, Chief Economist, Mahindra Group, adds, cotton prices are set to weaken amid slackening demand and global recessionary fears. A better crop outlook could also drive cotton prices lower, he opines.
The Indian government would soon launch the second round of production-linked incentives (PLI) in textiles to boost production of apparel and garments as they got limited benefits in the first round, Singh adds.
