New Delhi [India], June 23 (ANI): India's textile exports will likely improve as declining Chinese apparel export shares create fresh opportunities amid growing FTAs and global demand recovery, says Motilal Oswal.

According to the report, the global apparel retailers and brands are becoming increasingly optimistic about growth prospects amid stabilizing inventories, better sell-through trends, and recovering discretionary demand across the US and Europe.

'This is leading to improved sourcing visibility and healthier ordering cycles, which is positive for Indian textile exporters through stronger order flows, better capacity utilization, and improved margin visibility,' the report said.

A key growth driver for the sector is the recently concluded India-UK Free Trade Agreement (FTA), which is expected to significantly improve the competitiveness of Indian textile and apparel exports in the UK market. The UK imports nearly USD 20 billion of apparel, however India holds only about 6 per cent of UK's market share due to the existing 8-12 per cent import duty disadvantage compared countries such as Bangladesh, Turkey, and Cambodia that enjoy duty-free access.

'The proposed FTA is expected to remove import duties, significantly improving India's competitiveness in the UK market and aligning it with key sourcing nations,' the report noted.

'China's declining apparel export share from 37% (CY14) to 29% (CY24), is creating a significant opportunity for India, which is well-positioned to capture share through recent trade agreements, PLI scheme support, and expanding production capacity,' the report noted.

Combined with the ongoing China+1 sourcing strategy and rising labour costs in China, the agreement could help Indian exporters gain a larger share of the UK market, as per Motilal Oswal.

'Over the medium term, India's UK apparel exports are likely to increase as global brands diversify sourcing, similar to Vietnam's strong post-FTA growth trajectory,' the report added.

Overall, the continued decline in China's apparel exports to the US is creating a significant opportunity for Indian exporters to expand their global market share. China's share of global apparel exports fell to 29 per cent in CY24 from 37 per cent in CY14, while its share of US apparel imports dropped to 22 per cent in 2023 from 37 per cent in 2019, as per the report.

While Bangladesh and Vietnam have traditionally benefited from lower costs and favourable trade agreements, 'India is increasingly well-positioned due to the recent new trade agreements, large production capacity, improving infrastructure, and strong government support through initiatives such as the PLI Scheme for Textiles, and the development of mega textile parks.' (ANI)