Based on strong order flow and increasing demand, Tamil Nadu’s readymade garment exporters are expected to enjoy an 8–10 per cent increase in income to Rs. 43,000 crore this fiscal year, according to a report. After two years of reduced demand and muted realisations, the industry in Tamil Nadu has shown indications of revival, and it is anticipated to fare better than the national average, where revenue growth is predicted to be between three and five percent this fiscal year.
Crisil Ratings stated in a report that improved operating leverage, a slight rise in realisations, and stable yarn pricing would result in an improvement in operating profitability of 25–30 basis points (bps). The report stated that the industry in India will also gain from the government’s encouragement through various schemes, recent political upheavals, and the ongoing gas problem in Bangladesh.
It went on to say that the industry will expand following an extended period of weak demand in important export markets, namely the US and Europe, which make up the majority of the demand. In addition, extending the export incentive program through 31st March 2026 (which offers a refund of federal and state taxes and levies) for clothes, made-ups, and garments would guarantee cost competitiveness and assist businesses in obtaining orders, which will increase volume.
It further stated that a slight increase in cotton costs may be readily passed on to consumers due to the soaring demand, preventing any decline in profitability. In the current fiscal year, players are likely to invest between Rs. 400 and Rs. 450 crore in maintenance capital expenditures in addition to increasing capabilities by 5 per cent.
The volume of the Tamil Nadu ready-made clothing sector, which makes up more than 30% of India’s ready-made clothing exports, is expected to increase by 6-7% during the current fiscal year. The region of Tirupur, India’s centre for knitwear, will propel growth, helped by rising demand from the US and Europe.
Over the longer term, exporters will benefit from the government’s intention to revise the Production-Linked Incentive (PLI) scheme for textiles and broaden its application to the ready-made garment industry, according to Jayashree Nandakumar, Director of Crisil Ratings.
