From the highs of the pandemic, growth and demand for the textiles sector has moderated this financial year. The Russia-Ukraine war, high inflation and the threat of a looming recession in key markets like the US and Europe have led to a slowdown in exports. The silver lining for the sector has, however, been robust domestic demand and new pockets of growth. In a conversation with ET Digital, Arun Roongta, Managing Director, HGH India, talks about the trends and challenges for the sector and the opportunities. Edited excerpts:
Economic Times (ET): What is the status of the home textiles and furnishing industry in India?
Arun Roongta (AR): Indian home textiles and furnishing industry continues to grow despite several challenges. Exports to Europe and the EU, which make 80% of India’s market for these categories, are stagnant at this point. However, the domestic market continues to grow at 15% per annum.
Consumers are shifting towards ready-to-use products like readymade sofas, cushion covers, curtains, blinds, bed sheets and towels instead of customising them. In 2022, the overall size of the home textiles & furnishing industry, including the unorganised sector, was about $18-19 billion, of which $8.2 billion was exported and remaining $10 billion was domestic consumption. About 40% of domestic consumption in home textiles was for the bed & bath category alone. Still, over 95% of domestic demand is met by the unorganised and MSME sectors. Wider definition of furnishing will also include furniture and home décor accessories and these numbers would get bigger.
India is targeting an average GDP growth of over 7% per annum to become a $5-trillion economy by 2025-26. As the world’s fifth-largest economy with a population of 1.4 billion people, it is today one of the biggest and rapidly emerging markets in the world. India’s aspiring, young consumers with rising incomes are consistently moving upwards, adapting to better products, better designs and an international lifestyle. With demand for home products increasing at 20% per annum, business growth opportunities in the Indian market will continue to grow for domestic and global players.
India is a huge but highly diversified market where connecting with the right business partner is a major challenge faced by both international and Indian brands and manufacturers.
ET: What was the impact of the pandemic on exports and domestic consumption and what does it look like now?
AR: After short cyclical ups and downs in demand, the net effect of the pandemic on the domestic market has been a net increase in size of the domestic market by 15-20%, as people learnt to spend more on their homes and living environment and opt for better quality. While exports picked up for some time, other non-pandemic factors like the Ukraine war and high inflation marred them in key markets like the European Union, USA and Japan. More recently, some signs of international demand re-emerging are visible, though slowly. The domestic market for furnishing fabrics particularly took a pause during the last Diwali season, due to overconsumption and very high sales in 2021-22. The current year looks very promising in the domestic market across all home product categories, including home textiles.
ET: There is a slowdown across markets like Europe and the US. What impact is that having on Indian producers and how are they coping with the situation?
AR: I think this is a short-term trend triggered by the Ukraine war, high oil prices and high inflation in post-Covid markets. Consumers in the USA, Europe and Japan are simply spending less at the retail level on textile purchases to balance their budgets. These countries make up over 80% of India’s exports of textiles across all categories, like readymade garments, apparel fabrics and home textiles. As inflationary conditions cool off and retailers exhaust their stocks, added by growing preference of importers to move away at least part of their sourcing from China, Indian textile exporters should see good demand from the second half of 2023. We are certainly facing stiff competition from countries like Vietnam and Bangladesh, who besides having labour cost advantage also enjoy favourable trade terms and duty-free access to many markets. India just concluded an FTA with Australia and the UAE. This should work to its advantage. We need to do similar agreements with larger buyers like Europe and USA.
Skyrocketing prices of cotton, which constitute a major part of India’s textile exports, impacted demand adversely in this segment. Now that the prices are reverting to normal, with a good new cotton crop, things should get better. Besides, India needs to work more effectively in its export promotion and marketing efforts. Products need to be contemporised further in terms of designs, quality and performance. We need to offer better functionality and features, besides good feel and good designs.
ET: How has the domestic market evolved when it comes to demand and where are the pockets of consumption?
AR: Interestingly, besides metros and big cities, the demand from tier 2-3 cities is increasing now. That is where one has to look at more seriously now. The total market size in India is expanding. Non-consumers are turning into consumers. That is the segment that is very interesting. Certainly, the market is spreading more evenly across the country. Earlier, the market size was restricted to 12-15 cities, metros and mini metros. About 15 years back, people from Ludhiana would come to Delhi to shop for home furnishings. But now cities like Satara also have their own home furnishing stores. Pockets of consumption are wider and deep now in smaller cities. About 100 smart cities that are being established have a huge opportunity for home textile as well because people are shifting to these places and getting established there. So, markets are no more restricted to metros. It is a good sign for manufacturers, retailers and for India as a country, as prosperity is spreading in the smaller pockets. It is becoming visible in retail sales in home categories as well.
ET: What are the current challenges for the sector and how can we overcome them?
AR: The biggest challenge which we feel exists is that we are not still paying enough importance to product development, marketing and distributing. Production is not a challenge. India’s quality is already considered the best. When people want to buy home furnishing products, they already prefer made-in-India products. But there is less synchronisation in production and marketing, I would say. Export production is always led by buyer specification. So we have little say there. For example, if Walmart is placing an order, they will just tell what they want and Indian companies will produce it and export it as per their samples. But when it comes to the domestic market, I think we still need to spend a lot more effort on design and product development, marketing and expanding retail distribution into tier 2-3 cities.
Our distribution channels are unorganised to a large extent and I think the retailer here needs to be better informed about the product. They are selling in India with price and discounts as drivers rather than value-driven sales. These are some efforts that HGH India has also been making off late. For example, World of Sleep is a key focus area at HGH India where we train the retailers on what is the difference between a Rs 20,000 mattress and a Rs 2-lakh mattress.
ET: Sustainability is the buzzword now. Are Indian producers geared up to face the new realities?
AR: Yes, very much. Producers are increasingly using sustainable raw materials, recycled fibres, biodegradable inputs from raw materials to process and package goods. Alternatives like organic cotton, recycled polyester, organically produced natural fibres like bamboo, jute are increasingly being used. Natural dyes and organic chemicals are being used for textile processing. Welspun, Trident, Indo Count, Himatsingka are all offering products that meet the defined standards of European and American agencies, certifying their products as sustainable, organic, biodegradable and eco-friendly.
ET: HGH India is scheduled to take place around July this year. What is the key scope of the bi-annual trade show this year?
AR: The 13th edition of HGH India, scheduled for July 4-07, 2023, at the Bombay Exhibition Centre in Goregaon, Mumbai, will highlight innovations for festive and the autumn/winter 2023 retail season.
As retailers and consumers seek innovations at a quicker pace, exhibitors across categories will introduce new concepts in products, designs, colours and materials from home textiles, home décor, home furniture, area rugs, floor coverings, handicrafts, outdoor, houseware, cookware, kitchenware and gifts.
HGH India will have brands showcase their autumn/winter 2023 range in the July 2023 edition, allowing buyers to replenish supplies for the forthcoming festive season. HGH India, being bi-annual, now just helps our participating brands to explore business in shorter cycles in a dynamic and growing consumer demand and competitive market environment.
ET: Why are trade shows like HGH important and how will they benefit Indian exhibitors?
AR: In an ever-evolving and emerging market like India, where consumer demand for most of the home products is increasing by 20-25% year on year, it is vital for retailers, manufacturers and brands to stay aligned to global product and design trends. HGH India helps in identifying these trends, connect the manufacturers and brands with retailers and distribution partners, and helps retailers source innovative products from Indian and international sources to meet the demand of aspiring, young Indian consumers.
Trade shows like HGH India enable Indian and international brands, manufacturers, exporters, importers and suppliers to present their product range, innovations and latest collections to Indian trade buyers and enable them to connect directly with Indian retailers, importers, distributors, trade representatives, wholesalers, institutional buyers and interior designers from all over the country. It helps new brands, designers and manufacturers launch their products among trade channel partners, all over the Indian market.
ET: What is the number of participants you expect at this year’s trade show?
AR: About 700 exhibitors from 32 countries, India’s leading brands, large companies, MSMEs and various segments of handicrafts & handloom sectors are expected to attend HGH India 2023 in Mumbai.