According to the International Monetary Fund, the country’s textile exports declined 80-90 per cent in April due to the lockdown in India and reduced buying by the world’s largest textile importers, such as the European Union and the United States. Overall, due to the global economic slowdown, these textile exports, which contribute about 25 per cent of total demand, are expected to decline this fiscal by 30-40 per cent.
Domestic demand for RMG is also likely to decline due to lower income rates, postponement of weddings and personal events and this fiscal year’s decrease in festive activities. Small and medium-sized enterprises ( SMEs) have a 30-40 per cent share of Rs 4.8 trillion in the total ready-made garment market. Similarly, there is expected to be a fall in demand for the home furnishings segment. However, due to the forthcoming monsoon and winter seasons, the segment is anticipated to recover sooner than garments.
The demand for goods such as bedsheets, blankets and towels would be comparatively higher in home furnishings, compared to discretionary items such as curtains and home decoration. In addition, historically better financials (operating margins, gearing and interest coverage ratios) of home furnishing companies will also provide relief in these tough times as compared with other segments of the textile value chain.