Tariffs to trim 5-10% off Indian home textile industry revenue: Crisil

Exports of home textiles account for about three quarters of the industry’s revenue.

Cash accruals will thus be lower this fiscal for the sub-sector relative to the last fiscal, leading to weakening credit metrics of home textiles manufacturers.

Three factors would soften the blow somewhat—frontloading of sales during April-August 2025; limited capacities of competing nations like China, Pakistan and Turkiye with lower tariffs in the product categories supplied by India; and likely diversification of Indian manufacturers to alternative geographies, the rating agency said in a recent press release.

Additionally, deleveraged balance sheets will partly offset the impact on credit profiles.

Crisil’s analysis of about 40 home textile companies, which account for 40-45 per cent of the industry revenue, indicates this.

“Home textiles are discretionary products and their exports to the US grew a modest 2-3 per cent in the first quarter of this fiscal as retailers remained cautious of demand amid inflationary concerns. But prior to the implementation of higher tariffs from August 27, exports had spiked because of some frontloading of orders,” said Manish Gupta, deputy chief rating officer, Crisil Ratings.

“Additionally, with competing countries having limited capacity to make cotton-based home textile products, India should be able to maintain its competitive position in the US market over the near term. That should limit the overall revenue decline for the industry to 5-10 per cent this fiscal,” he added.

The impact is expected to be more pronounced for companies that generate more than half of their revenue from the United States.

To offset the lower offtake in the US, Indian manufacturers would try to increase trade with the European Union (EU) and the United Kingdom (UK). These geographies together accounted for close to 13 per cent of India’s home textile exports in the last fiscal.

The industry's ability to navigate these challenges will depend on continuation of higher US tariffs on India versus competing nations, policy support from the central government, demand trends in the US given inflationary pressures and cotton prices, all of which are important to monitor, Crisil Ratings added.

ALCHEMPro News Desk (DS)