Indian apparel exporters are expected to see revenue growth of 9-11% in FY2025, driven by retail inventory liquidation and global sourcing shift towards India, according to ICRA.

Despite challenges such as high inventory, subdued demand and competition in FY2024, the long-term outlook remains positive.

Government initiatives such as the PLI scheme and free trade agreements will further boost growth.

Indian apparel exporters are expected to see revenue growth of 9-11% in FY2025, according to credit rating agency (ICRA). The expected growth is mainly due to gradual retail inventory liquidation in key end-markets and global sourcing shift towards India. This follows a lackluster performance in FY2024, with exports suffering due to high retail inventory, subdued demand in key end-markets, supply chain issues including the Red Sea crisis, and increased competition from neighbouring countries.

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The long-term outlook for Indian apparel exports is positive, driven by increasing product acceptance in end-markets, evolving consumer trends and government boost in the form of the Production Linked Incentive (PLI) scheme, export incentives, proposed free trade agreements with the UK and EU, etc.

As demand recovers, ICRA expects capex to increase in FY2025 and FY2026 and is likely to remain in the range of 5-8% of turnover.

At $9.3 billion in calendar year (CY23), the US and European Union (EU) region accounted for more than two-thirds of India’s apparel exports and remain the preferred destinations.

India’s apparel exports have gradually recovered this year, although certain end-markets continue to face headwinds due to geopolitical tensions and macroeconomic slowdown. Apparel exports grew about 9% year-on-year to $7.5 billion in the first half of FY2025, ICRA said in a report, driven by gradual inventory clearance, global sourcing shift to India as part of risk-averse strategy adopted by several clients, and increased orders for the upcoming spring and summer season.