Indian apparel exporters are anticipated to have a 9–11 per cent increase in revenue in FY ’25, largely due to a shift in global sourcing to India and the gradual liquidation of retail inventory in important end countries, according to ratings agency ICRA.
ICRA stated that the Government’s support through the production-linked incentive (PLI) scheme, export incentives, the proposed free trade agreement with the UK and the EU, and improved product acceptance in end markets contributed to the favourable long-term prospects for Indian apparel exports.
It stated that the anticipated improvement in this fiscal year comes after a weak showing in FY ’24, when exports suffered from high retail inventory, weak demand from the main end markets, supply chain problems, notably the Red Sea crisis, and increased competition from nearby nations.
In light of the renewed demand, ICRA stated that it anticipates that capital expenditures will rise in FY 2025 and FY 2026 and might remain between 5 and 8 per cent of total revenue.
ICRA Senior Vice President & Co-Group Head Corporate Ratings Srikumar Krishnamurthy wrote, “Due to the de-risking strategy that many customers have adopted and the replenishment of retail inventory in important end markets, particularly the US and the EU, Indian apparel exporters are expected to report a 9–11 per cent revenue growth in FY ’25, following a slight decline (down 2 per cent) in FY ’24.”
However, he noted that despite a muted macroeconomic climate and geopolitical concerns, difficulties with demand uncertainty still exist in a few important areas. According to ICRA, current geopolitical unrest in Bangladesh may lead to capacity expansions abroad, notably in India.
However, it said that Bangladesh is able to maintain its competitiveness versus the majority of other developing nations because to the availability of workforce at low prices and favourable duty access, given its position as a least developed country for an additional two years on exports to the US and the EU.
