India's textile and apparel industry is facing a severe blow due to the global economic slowdown and declining global trade. The industry heavily relies on developed economies such as the US and European Union (EU) markets, and the decline in exports to these regions has been consistent since July 2022.
In the first half of 2022, India exported textile and apparel goods worth $22.33 billion, but in the second half of the year, the exports fell to $16.21 billion, a decline of 27.40 per cent, as per the Indian ministry of commerce and industry.
Inflation rates in the US and EU economies are on the rise, with prices in the US increasing by 5.4 per cent year-over-year in January 2023, and core inflation gauge up by 4.7 per cent. In Europe, core price growth hit a record high of 5.3 per cent. High energy costs are adding to inflationary pressures for consumers and businesses, leading to central banks raising interest rates to address the situation, which could negatively affect investment. Additionally, consumption may remain weak in the short term due to inflation outpacing nominal wage growth.
India's textile and apparel exports to the US declined by 23.94 per cent to $4.70 billion during July-December 2022 compared to $6.18 billion during January-June 2022. Likewise, India's export to EU-27 countries also declined by 24.54 per cent to $3.29 billion in the second half of 2022 compared to $4.36 billion during January-June 2022, according to Fibre2Fashion’s market insight tool TexPro. Exports to these regions have been consistently declining since July 2022, with only a slight increase in November and December, possibly due to the holiday season.
The downturn in India’s textile and apparel export is expected to persist in 2023, heightening the possibility of layoffs in a sector that employs over 45 million people.