China's renminbi devaluation a concern for Indian textile exporters

The US happens to be the world's biggest importer of home linen followed by the EU, triggering excitement among Indian exporters

Why are Indian producers of bed linen and towels - major parts of home textiles segment - excited about the slow but steady improvement in outlook for the United States (US) housing sector after the collapse wrought by the brutal financial crisis of 2008-09? This year's June proved to be exceptional when, according to the US commerce department, new home starts rose sharply by 26.6 per cent. These, besides existing home sales in the US, are now at their highest since 2007 as the boom returns to the rental market.

"All this spells good times for us in the home textiles division. You see when families or individuals in the US or other developed economies move to new abodes, they compulsorily buy fresh sets of bed linen and towels. If excitement among us exporters is palpable, it is because the US happens to be the world's biggest importer of home linen followed by the European Union (EU).

The house building industry in the UK too, continues to remain buoyant with required annual supply of homes seen at 240,000. That's again good news for home linen manufacturers," says Anil Jain, chairman, Indo Count Industries.

Bed linen alone, famed towels - used at the Wimbledon in separate colours for men and women contestants - are made in a Gujarat factory by Welspun since its acquisition of the iconic British towel manufacturer Christy in 2006. For India's home textiles sector, retailing in the US is making a strong comeback since late 2014.

"Whether it's a towel or bed linen, the growing numbers of customers in developed markets like the US are becoming more and more demanding about the quality and are ready to pay a few extra quid for that. A better part of one's life is spent sleeping. Why sleep on junk when premium quality sheets will give comfort and last much longer than the ordinary? We, at Indo Count, saw the opportunity to scale up from a large cotton yarn manufacturing unit to producing bed linen by installing air jet looms for 'wide width' fabrics," said Jain.

An industry official said whether an Indian manufacturer will stand to benefit from lucrative markets of the US and the EU for home textiles will depend on how efficiently the chain - from procurement of raw material (in this case mostly cotton which comes in a range of quality) and various stages of manufacturing to finally reaching the product to buyers in good time - is managed.

WARP & WEFT OF HOME LINEN SECTOR

• How an Indian manufacturer will stand to benefit from lucrative markets of the US and the EU for home textiles will depend on how efficiently the chain — from procurement of raw material and various stages of manufacturing to finally reaching the product to buyers in good time — is managed
• Whether it is for mid-market Walmart or the high-end Bloomingdale’s in the US or Debenhams to John Lewis range in the UK, to become their strategic supply partners will require of Indian firms to be convincing about their “production base with outstanding execution capability”
• The global home textile industry (of which bed linen constitutes about 21 per cent) will be growing at a compound annual growth rate (CAGR) of five per cent in the next few years
• According to Technopak, the global home textile market will expand to an estimated $96 billion in 2017 from $86 billion in the current year

The saying goes: Fine linens begin with fine cotton. The length of individual fibres or staples decides the quality of cotton. With its mill in Kolhapur, a major cotton growing centre in Maharashtra, Indo Count enjoys the cost advantage in raw material procurement. But for success in increasingly competitive markets of the West, says a Texprocil official, companies must not compromise on employment of state-of-the art machinery. Export success for textile groups like Alok Industries, Welspun and Indo Count are all underpinned by their capacity to steadily move up the value chain, owning design centres capable of staying in sync with market-specific trends and building sustainable relationship with big, fashionable retail chains.

Whether it is for mid-market Walmart or the high-end Bloomingdale's in the US or Debenhams to John Lewis range in the UK, to become their strategic supply partners will require of Indian companies to be convincing about their "production base with outstanding execution capability." Victoria Classics in the US is a leading importer of high quality home textiles from various parts of the world and it wants suppliers to work with them "on price formula base and mutual profit agreement."

Jain says the global home textile industry (of which bed linen constitutes about 21 per cent) will be growing at a compound annual growth rate (CAGR) of five per cent in the next few years. According to the consulting firm Technopak, the global home textile market will expand to an estimated $96 billion in 2017 from $86 billion in the current year. Opportunities are beckoning the likes of Alok, Welspun and Indo Count.

The latter's focus on mid-to high-segment global bed linen market has, therefore, raised capacity in phases from 36 million metres (mm) in 2007 to 68 mm in 2015. To make full use of the expanded capacity, the company has recently opened showrooms, design studios and warehouses in the UK and Australia.

But China's attempt to improve its textile products acceptability on price point through devaluation of renminbi remains a major concern here.