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Indian textile sector may see revenue, margin pressures in Q2 FY26

17 Aug '25

2 min read

Indian textile sector may see revenue, margin pressures in Q2 FY26

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Insights

Revenue and margin pressures may be seen in export-oriented tariff-hit Indian sectors like textile, leather, chemicals and agriculture in Q2 FY26, the August 12 issue of SBI ECOWRAP said.
SBI estimates point to a lower inflation print vis-à-vis the central bank's projection.
However, with August inflation print likely to top 2 per cent and be closer to 2.3 per cent, a rate cut in October looks difficult.

Revenue and margin pressures may be seen in export-oriented tariff-hit Indian sectors like textile, leather, chemicals and agriculture in the second quarter (Q2) of fiscal 2025-26 (FY26), according to the August 12 issue of SBI ECOWRAP newsletter published by the State Bank of India (SBI).

India’s consumer price index (CPI)-based inflation moderated to a 98-month low of 1.55 per cent in July this year compared to 2.1 per cent in June and 3.60 per cent in July 2024. The July reading is marking the ninth consecutive month of decline and mainly due to decline in food inflation, which was also at a 78-month low, the newsletter noted.

The core inflation also decelerated sharply and for the first time in past six months stood below 4 per cent (at 3.94 per cent). Excluding gold prices, the core inflation decelerated below 3 per cent to 2.96 per cent in July 2025, almost 100 basis points lower than the headline core CPI.

SBI estimates point to a lower inflation print vis-à-vis the central bank’s projection. However, with August inflation print likely to top 2 per cent and be closer to 2.3 per cent, a rate cut in October looks difficult, the newsletter said. Even a rate cut in December looks a tad difficult if growth numbers for Q1 and Q2 this year are taken into consideration.

Fibre2Fashion News Desk (DS)

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