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Readymade garment exports scale new peak in February 2022

ICICIdirect Research 16 Mar 2022 DISCLAIMER

What’s buzzing

Textile exports continued their healthy growth momentum across categories in February 2022. Key positive was readymade garment (RMG) exports surpassing Rs 12000+ crore mark for the first time. Sufficient availability of raw materials and lower labour costs, places India as an attractive alternative over China. Hence, sighting the robust opportunities in the apparel export space, GoI has enhanced focus on the sector.


Exports for RMG grew 23% YoY to Rs 12002 crore (two-year CAGR: 7%). In the last three months, the RMG segment has staged a strong recovery with consistent sequential growth of 38.3%, 4.1%, 4.2% in December, January and February 2022, respectively. Subsequently, for April-February 2022, export for RMG has surpassed pre-Covid levels with growth of ~5% to Rs 106165 crore (US$14.3 billion) with the trajectory accelerating in the second half of FY22. Driven by significantly higher yarn prices and volume demand owing to US sanctions on China’s Xinjiang cotton, the export market for cotton yarn and home textile continued to be healthy with two-year CAGR of 26% in April-February 2022 to Rs 103636 crore (US$13.9 billion). Overall India’s textile & apparel exports for April-February 2022 were at ~ US$37.3 billion (vs. US$34 billion in FY20). We expect textile exports to surpass the US$40 billion mark for the first time in FY22.

Our Perspective:

The global apparel trade market is pegged at US$482 billion (pre-Covid levels) and India’s share is miniscule at ~3.4% in the overall trade. Indian apparel exporters, in the past couple of quarters, have witnessed strong customer interest owing to many large global retailers diversifying their sourcing and reducing dependence on China. Indian companies have a healthy order book for the next six months and are also steadily exploring opportunities to expand their garmenting capacities to capitalise on long term growth opportunities. We believe Indian apparel exporters are on the cusp of a breakout owing to conducive business environment with realigning of sourcing pattern by global retailers coupled with increased government focus (approval of Mega Apparel parks, extension of export incentive scheme and pursing FTA with major export markets). From our coverage universe, we expect KPR Mills and Gokaldas Exports to be the key beneficiaries of the current trend.

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