Apparel exports are expected to see a muted recovery with around 8-9 per cent growth in revenues, said ICRA in a note recently. The revival is expected owing to the demand for stock replenishment in the US and the EU regions.
The retail apparel brands in the US and EU, together account for close to 55 per cent of global apparel trade and are expected to liquidate high inventory build-up and book their orders for the summer 2024 season in H1 FY2025, read the release.
“After a nominal decline in revenues in FY2024, ICRA expects the apparel-exporting companies to report a recovery in FY2025 on a lower base, with replenishment of stock in the US and the EU regions,” said Priyesh Ruparelia, Vice President and Co-Group Head, corporate sector ratings, ICRA.
A difficult operating environment had pushed back large capex investments for most players. However, based on an expectation of demand revival in FY2025 and the industry players’ strategies to take advantage of the China Plus One movement, ICRA said that it expects a pick-up in capex spending in FY2025.
As per the release, the Red Sea conflict has not led to any cost implication in apparel exports except for the shipment delays by 15 days from its original time.
Further, the report said that the PM Mega Integrated Textile Region and Apparel (MITRA) scheme will strengthen India’s presence in the global apparel trade, by providing scale benefits and strengthening the country’s presence in the MMF supply chain.
Moreover, the release said that the operating margins of apparel exporters may moderate to 9.8-10 per cent in FY2024 against 11.3 per cent in FY2023 due to a relatively weaker operating performance in the 9 months of FY2024 and contraction in volumes leading to a decline in operational efficiencies.
