Mega Trend in Textile Sector

 US Senate passes bill to ban all products from China's Xinjiang

● Implications

◇Consolidated supplier base

◇market share of China will be down

◇exports from India will rise

Owing to the abundance of raw materials and presence across the value chain

Xinjiang Province market share accounts for

80% of China's cotton

35% in apparel exports of the global trade.

China exports $44B worth of textiles from cotton produced in Xinjiang

The West is keen on importing textiles from India

India is the 2nd largest producer of cotton after China

Cotton + cotton yarn + Made up are the export contributor

Major importers of cotton and cotton yarn are Bangladesh & Vietnam manufacturers and export ready-made goods

This combined with cabinet meet on textiles to incentivize exports is a win-win for India

Temporary increase in cotton price is also helping

Keeping GST at 5% is encouraging and driving CAPEX in the industry

Textile exports from India are up due to highest increase in demand in the last 10yrs

Readymade garment exports witnessed 22% up in Dec21(YoY)

India's domestic textile & apparel market is estimated at around $120 Billion in 2020 & it is expected to grow by 12%.

For Textile stocks, their cost of capital is far less than India Inc. bcz of multiple Govt Incentives.

Hence, their Targeted ROCE for promoters is around 10-12 %

Great sector for Promoters, but not that great for investors

Select vertically integrated companies with high growth and high profitability

Indian textile industry employs over 45M people being the 2nd largest employer after Agriculture.

FTA with the EU will be a big boon for this sector

Textile Ministry has undertaken various initiatives to boost the sector and make Cos. Aatmanirbhar

◇PLI Scheme

◇Mega textile parks

◇TUF for Tech up-gradation

◇100% FDI

Govt’s focus on getting concessional duties for Textile products in all the ongoing FTA negotiations with countries like the UK, UAE, Canada, EU, Australia would help India realize the dream of

'Local goes Global'

'Make in India for the world '

Govt eyes $10B technical textiles exports in 3yrs

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