Shifts in Consumer Spending Impact India's Garment Industry

India's ready-made garments industry is set for a slight revenue growth moderation to 4-6% from the previous 6% due to weak domestic demand and shifts in consumer preferences. Export revenue is anticipated to rise by 5-7% as EU and US retailers restock inventories, although realisations could remain flat.

The growth trajectory of India's ready-made garments (RMG) industry is poised for a slight deceleration this financial year, with CRISIL Ratings predicting a 4-6% increase, down from 6% in the prior year, primarily due to sapped domestic demand.

A shift in consumer spending priorities, diverting funds to areas like travel, electronics, and various services, is cited as a key factor likely to suppress RMG demand. CRISIL Ratings analyzed over 140 RMG manufacturers, with a collective revenue of approximately Rs 43,000 crore.

Notably, the export sector is expected to experience a 5-7% uptick as US and EU retail sectors replenish their stocks. However, expectations of lower cotton prices mean that financial returns might remain static. CRISIL also notes a temporary positive impact from Bangladesh's political instability, though challenges persist due to RMG's vital role in Bangladesh's economy and different product portfolios.

(With inputs from agencies.)