MUMBAI: The country’s home textile manufacturers -- who meet as much as 30 percent of the US demand thus being the second largest source market for American importers, are bracing for a 5-10% decline in revenue, apart from reduction in operating profitability, as the 50% punitive tariffs that the US slapped from August 27 as exports account for about three-quarters of the of home textiles industry revenue.
In 2024, the US import basket of home textiles was split between China (34%), India (30%), Pakistan (9%) and Turkey at 8%, while global home textiles imports totalled $39 billion in 2024, with the EU snapping up 29%, the US taking in 28% and the England consuming 5 percent, according to a report based on the analysis of 40 home textile firms that account for 40-45 percent of the industry revenue, by Crisil Ratings on Thursday.
According to the analysts at the agency, three factors could soften the blow to some extent—frontloading of sales during April-August; limited capacities of competing nations such as China, Pakistan and Turkey with lower tariffs in the product categories supplied by India; and, finally the likely diversification of Indian manufacturers to alternative geographies.
Manish Gupta, deputy chief rating officer at Crisil, says that home textiles are discretionary products and their exports to the US grew a modest 2-3% in the first quarter of this fiscal as retailers remained cautious of demand amid inflationary concerns. But prior to the punitive 50 percent tariffs (from August 27), exports due to frontloading of orders.
“More importantly, with competing countries—China, Pakistan and Turkey having limited capacity to make cotton-based home textile products, the domestic companies should be able to maintain its competitive position in the US over the near term. That should help limit the overall revenue decline for the industry to 5-10 percent this fiscal,” Gupta said, adding the impact will be more pronounced for companies that generate more than half of their revenue from the US which sources as much as 30 percent of its demands from India, which the EU and the England together account for 13 percent of the domestic home textile exports last fiscal.
According to Gautam Shahi, a director at Crisil, tapping alternative export destinations will take time while operating profitability on exports to the US over the remainder of this fiscal may decline sharply as domestic exporters would have absorbed a part of the higher tariffs coupled with an expected dip in US demand due to rising prices. Consequently, operating profitability could fall 200-250 bps this fiscal from last fiscal.