Revenue of Indian apparel exporters may grow 9-11% in FY25 : ICRA

NEW DELHI : Indian apparel exporters will witness a revenue growth of 9-11% in FY25, driven by a gradual liquidation of retail inventory in key markets and a shift towards sourcing from India as part of global derisking strategies, as per a report by Icra on Monday.

This positive outlook comes after a challenging FY24, during which exports faced significant hurdles due to high retail inventory levels, sluggish demand, supply chain disruptions—partially caused by the Red Sea crisis—and intensified competition from neighbouring countries.

The projections are based on Icra’s analysis of a sample set of 15 apparel exporting companies, which collectively represent about 15% of total Indian apparel exports.

Despite the tepid performance last fiscal year, the long-term prospects for Indian apparel exports remain favourable, the credit rating agency said in a report. Enhanced product acceptance in global markets, evolving consumer trends, and government support through initiatives like the production-linked incentive (PLI) scheme and export incentives are expected to contribute to this growth trajectory, the report added.

Furthermore, the proposed free trade agreements (FTAs) with the UK and the EU are anticipated to bolster the sector. In the first half of FY25, apparel exports increased by about 9% year-on-year, amounting to $7.5 billion. This recovery is attributed to the gradual liquidation of inventory and a higher number of orders booked for the upcoming spring/summer season.

“After a marginal decline of 2% in FY2024, Indian apparel exporters are expected to report a revenue growth of 9-11% in FY2025,” said Srikumar Krishnamurthy, senior vice president at Icra. “This growth will be supported by derisking strategies adopted by various customers and the replenishment of retail inventory in key markets, particularly in the US and the EU,” he said.

However, he cautioned that challenges around demand uncertainty persist due to a subdued macroeconomic environment and geopolitical issues.