India's textile sector competitiveness may gain edge as Vietnam fights rising labour costs, Bangladesh grapples with political instability: Report

ANI June 17, 2025 288 views

India's textile sector could gain a competitive advantage as Vietnam deals with increasing labor expenses and Bangladesh faces political turmoil. While long-term prospects look promising, Indian textile companies reported sluggish growth in Q4 FY25 due to tariff uncertainties. The report highlights stable cotton prices and operational efficiency as key factors supporting future profitability. Global retailers may increasingly turn to India as sourcing becomes more challenging in competing markets.

"India's textile industry seems strong as global retailer inventories normalize and US-China tariffs may rise" - Systematix Research
New Delhi, June 17: India's textile sector may gain a competitive edge in the global market due to rising labour costs in Vietnam and ongoing political instability in Bangladesh, two of its key export rivals, according to a report by Systematix Research.

Key Points

1

Vietnam faces rising labor costs boosting India's appeal

2

Bangladesh political instability shifts global orders

3

Indian firms report muted Q4 growth amid tariff uncertainty

4

Cotton price drop aids spinning margins

The report, however, highlighted that the near-term outlook for the sector remains challenging. Tariff-related uncertainties may force exporters to absorb part of the additional costs, putting pressure on margins.

Companies are also expected to pass on a significant portion of these costs to consumers, which could lead to higher textile and apparel prices and potentially reduce demand from key markets like the US.

The report pointed out that global macroeconomic shifts are gradually working in India's favour. With Bangladesh facing political instability and Vietnam seeing a rise in labour costs, India is expected to become a more attractive sourcing destination for global retailers.

It said "India's textile industry seem strong, as channel inventories seem to be normalizing at the global retailer level, there is a likelihood of the US raising tariffs for China, labour costs are rising in Vietnam, and Bangladesh is seeing political instability".

Despite these long-term positives, Indian textile companies reported a muted performance in the fourth quarter of FY25.

Amid tariff uncertainty, the revenue of the companies rose by 5 per cent year-on-year (YoY), EBITDA declined by 3 per cent, and profit after tax (PAT) grew by only 3 per cent YoY, mainly due to weak volumes and ongoing uncertainty around tariffs.

"Textile companies reported muted revenue/EBITDA/PAT performance of +5 per cent/-3 per cent/+3 per cent YoY, respectively, due to tepid volumes, amid tariff uncertainty," the report stated.

Spinning companies, however, saw a marginal improvement in gross margins, supported by a 10 per cent YoY and 2 per cent quarter-on-quarter (QoQ) drop in cotton prices, and stable yarn prices, which were down 3 per cent YoY and flat QoQ.

Garments showed strong recovery, with normalizing retailer inventories pushing up sales volumes by 10 per cent YoY and 20 per cent QoQ. On the other hand, home textiles continued to witness weak demand, with volumes falling by 9 per cent YoY and 6 per cent QoQ.

Nevertheless, stable cotton prices, favourable forex rates, and a continued focus on operational efficiency are likely to support profitability for Indian textile firms.

Reader Comments

R
Rahul K.
This is great news for Make in India! 🇮🇳 Our textile sector has so much potential if we can capitalize on these global shifts. But the government must ensure stable policies - frequent duty changes hurt our exporters. Let's not waste this opportunity like we did in 2014-15 when China shifted production.
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Priya M.
As someone from Surat's textile hub, I see both sides. Yes, orders may shift to India, but our infrastructure bottlenecks remain. Power costs are high, ports need modernization. Unless these basics improve, we'll struggle to compete long-term despite others' problems.
S
Sanjay T.
Interesting analysis but let's not celebrate too soon. Bangladesh's political issues are temporary, and Vietnam has strong trade pacts. Our industry needs to focus on quality and fast delivery - foreign buyers won't come just because others have problems. Time to upgrade technology!
A
Ananya R.
The report misses one key point - our skilled workforce! Indian artisans create beautiful textiles that machines can't replicate. If we combine traditional craftsmanship with modern efficiency, we can command premium prices globally. #HandloomPride 🧵
V
Vikram J.
Cotton prices dropping is good, but what about synthetic fibers? Most global demand is shifting to polyester blends. Our over-dependence on cotton may backfire. Need more investment in man-made fiber production to truly compete with Vietnam and China.
N
Neha P.
Hope this translates to better wages for our textile workers! Many earn barely minimum wage while creating products that sell for 10x abroad. If we want sustainable growth, workers' welfare must be part of the equation.

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