A good year has come to an end for textile exports. The calendar year 2024 marked the highest ever (or near high) export volumes across all major high-value textile segments of the industry. The spectacular performance came against the backdrop of an adverse business environment for the industry, including declining domestic cotton production, market-based interest rates, high energy tariffs, and enforcement of regular income taxes. Yet, HVA exports managed to deliver a strong comeback, disproving the fearmongering of industrywide closures.
But that’s where the good news might end. Although the performance for the past calendar year was truly impressive, its latter half witnessed a slowdown in growth momentum. Export volumes across various high-value add segments, which witnessed multi-digit growth during H1-CY24, recorded a significant slowdown during the second half, with garment exports quantum growth almost coming to a standstill versus the same period last year.
This means that while export performance during the ongoing fiscal year 2024-25 might still witness the highest-ever volumes – outpacing the highest-ever achieved just last fiscal year – the increase may not be noteworthy. While overall HVA textile export earnings may record an increase of as much as 10 percent over FY24 due to improved prices, the spectacular volume performance of last year may no longer be achievable.
The high-value-added segments of the textile industry—garments, bedwear, towels, and knitwear—are forecasted to deliver mixed export performance in FY25. While there is clear resilience and potential for growth, the overarching trend highlights a shift from volume-driven expansion to a greater focus on value addition through higher unit prices.
The garments sector is showing signs of plateauing in export volume, with the FY25 projection set at 80,000 dozen units, slightly below FY24’s 83,000 dozen units. Readymade garments exporters appear keen to hold on to higher selling prices, with an average forecasted price of $50 per dozen. At this price, export earnings are expected to reach $4 billion. Overall, this would result in nominal and subpar export earnings growth of just three percent over the last fiscal year.
The bedwear segment is experiencing a remarkable rebound, with an anticipated FY25 export volume of 525,000 tons, surpassing the highest-ever export volume of 476,000 tons recorded in FY24. Despite this significant volume growth, unit prices remain a challenge, with forecasts showing $6 per kg. Export earnings are projected to reach $3.15 billion. This recovery in volume, coupled with potential price optimization, positions the segment strongly for FY25, reflecting robust demand and improved competitiveness.
The towels segment is forecasted to maintain steady export volumes at 225,000 tons, marginally above FY24’s level. However, the sector faces significant pricing challenges, with an average unit price forecasted at $4.75 per kg, which is well below the global average of $7.65 per kg. At the current price level, export earnings are expected to be $1.07 billion. This highlights a critical opportunity for the segment to improve pricing competitiveness and unlock greater revenue potential.
Knitwear remains on solid ground with forecasted volumes of 260,000 dozen units, higher than FY24’s 250,000 dozen units. However, the growth momentum is slowing, and unit prices are forecasted to average $21 per dozen, lower than the three-year average of $25 per dozen. Export revenues are expected to reach $5.3 billion. Stabilizing prices will be crucial for maintaining this segment’s strong position and sustaining its long-term growth.
Sectors like towels and knitwear need to address pricing challenges to reach their full export potential. The bedwear segment stands out with its strong recovery in volume, while garments indicate a maturing approach to balancing volume and value. Achieving FY25 targets will depend on a combination of stabilizing prices, sustaining competitive volumes, and aligning with global pricing benchmarks.
While higher unit prices can contribute to incremental growth in export earnings, they alone cannot deliver the quantum leap necessary for the textile industry to achieve transformative export performance. The focus on value addition, though important, must be complemented by significant efforts to unlock substantial growth in export volumes across all segments. Without a considerable increase in output, the industry risks stagnating in terms of its overall contribution to national export earnings.
If the textile industry is to achieve a total export target of $25 billion in the foreseeable future, it must prioritize expanding production capacity, diversifying product offerings, and improving market access to drive volume growth. Incremental gains from higher unit prices, while beneficial, are insufficient to achieve the scale of growth required to meet ambitious export goals. A dual strategy of boosting both volume and value is essential for the industry to realize its full potential and maintain its critical role in the national economy.