Home / Knowledge / News / Textiles / Ind-Ra revises Indian textile outlook to negative for FY21

Ind-Ra revises Indian textile outlook to negative for FY21

Feb '20
Pic: Shutterstock
Pic: Shutterstock
India Ratings and Research (Ind-Ra) recently revised the Indian textile sector’s outlook to negative for fiscal 2020-21 from stable, as weak domestic demand growth, threat of cheap imports and dwindling incentives and exports are likely to keep volumes muted. Ind-Ra however expects key raw material prices to remain low in the next fiscal after a correction in 2019-20.

That will contribute to a modest recovery in margins, stable working capital requirements and steady cash flows, Ind-Ra said in a press release.

Ind-Ra expects cotton prices to stabilise with improved cotton supply and an inventory build-up in 2020-21. The industry adjusting to a low dealer inventory is becoming the new normal. Easing of the goods and services tax (GST) implementation issues might only provide modest support to demand growth, unless liquidity improves. Liquidity remains chocked, with lack of bank funding and sluggish end-consumer demand.

Ind-Ra expects yarn production for 2020-21 to remain muted, with lack of visibility on wholesale demand. It also remains negative on the commodity segment and expects a marginal improvement in capacity utilisation in spinning mills under the cotton yarn segment. Sector consolidation will continue in the next fiscal, while the mid and small commodity players will continue to struggle.

The rating agency expects stable cotton-polyester staple fibre (PSF) spread to encourage switching to PSF, and hence, underpin the man-made textile demand. The spreads would help in improving the competitiveness of the synthetic value chain and support its demand growth. Globally, the consumption pattern remains skewed towards man-made textiles, contrary to domestic consumption. PSF prices would remain vulnerable to volatility in crude oil prices, should geo-political factors creep-up.

Textile exporters are likely to witness reduced demand on back of a weak Chinese demand, accompanied by declined cost competitiveness, leading to lower production volumes in 2020-21.

Ind-Ra expects withdrawal of the Merchandise Exports from India Scheme (MEIS) to affect export players of made-ups (home textiles) and garments. Exporters are likely to remain uncompetitive against counterparts in Pakistan, Bangladesh, Turkey and Vietnam due to further delays in the implementation of Rebate of State and Centre Levy of Taxes. All these factors would lead to margin pressures for exporters in 2020-21.

The company expects regulatory support in form of GST refunds for spinning chains and availability of input tax credit from units operating in the unorganised sector or composition scheme, to improve liquidity in the value chain. Also, the abolition of uncompetitive purified terephthalic acid imports could prove boon for the polyester value chain.

Fibre2Fashion News Desk (DS)

Must ReadView All

Fibre2Fashion: 21 years of serving textile-apparel-fashion industry

Textiles | On 17th Apr 2021

Fibre2Fashion: 21 years of serving textile-apparel-fashion industry

Fibre2Fashion, the online platform for the global...

Pic: Shutterstock

Textiles | On 17th Apr 2021

China's economy grows 18.3% in Q1 2021

Powered by a strong domestic and foreign demand, China's economy grew ...

Pic: Shutterstock

Retail | On 17th Apr 2021

US retail sales saw strong rebound in March: NRF

As government cheques fattened consumers’ bank accounts and more...

Interviews View All

Textile Industry, Head honchos

Textile Industry
Head honchos

Increased need for online fitting solutions as retailers shift to...

Textile Industry, Head honchos

Textile Industry
Head honchos

Marry craft and utility

Textile Industry, Head honchos

Textile Industry
Head honchos

Verticals like fast fashion won’t completely adopt personalisation on...

Shivendra Nigam,

Shivendra Nigam

Delhi-headquartered Cantabil Retail India Ltd was founded by Vijay Bansal...

Chini Chouhan,

Chini Chouhan

Founded by Chini Chouhan, her eponymous brand specialises in women's...

Dhruv Toshniwal & Udit Toshniwal,

Dhruv Toshniwal & Udit Toshniwal

Launched a year ago, Fashions Pvt Limited conceptualises and sees D2C...

Madison Maxey, Loomia

Madison Maxey

Loomia designs and manufactures soft circuit systems that can be produced...

Hemant Bheda, Arevo

Hemant Bheda

Arevo, based in Silicon Valley in California, develops technology to...

Tiasha Renganathan, Twinery Innovations by MAS

Tiasha Renganathan
Twinery Innovations by MAS

Twinery-Innovations by MAS is the innovation arm of Sri Lankan company MAS ...

Sarah Denise Cordery, Sarah Denise Studio

Sarah Denise Cordery
Sarah Denise Studio

Manchester, England-based Sarah Denise Studio provides relevant fashion...

Sweta Agarwal, A Humming Way

Sweta Agarwal
A Humming Way

A Humming Way (AHW) is inspired by the old-world regalia of Rajasthan...

Anjali Bhaskar, Samatvam

Anjali Bhaskar

Samatvam, a womenswear brand that blends age-old craftsmanship with modern ...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


Letter To Editor

(Max. 8000 char.)

Search Companies


Leave your Comments

April 2021

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

Advanced Search