 "Curtains and furnishing can cool down a room. (File photo)")
Home textile manufacturers' revenues are likely to decline by 5-10 per cent, apart from a reduction in operating profitability as a result of 50 per cent US tariffs, according to a report by Crisil Ratings.
The US imposed 50 per cent tariffs on imports of Indian goods, including a 25 per cent penalty for buying Russian crude, starting August 27. While US President Donald Trump and Prime Minister Narendra Modi have assured that trade negotiations are continuing, no deal has been reached so far.
The home textiles industry saw a 2-3 per cent growth in exports to the US in the first quarter of the current financial year (Q1 FY26). However, before the implementation of higher tariffs, exports had spiked because of some frontloading of orders.
Exports account for major revenue
Exports account for at least three-quarters of revenue for the home textiles industry. The industry's total market size is estimated at ₹81,000 crore in FY25, up from ₹75,000 crore in FY24. Of this, the exports to the US formed ₹26,000 crore (estimates) in FY25, increasing from ₹25,000 crore during the same period last year.
The tariff impact on this industry is likely to be more pronounced as exports to the US outnumber exports to other nations combined. Exports to other countries stood at ₹23,000 crore for FY25E, up from ₹20,000 crore in FY24.
Meanwhile, domestic sales account for ₹32,000 in FY25E, rising from ₹29,000 in FY24. Crisil analysed 40 home textile companies that account for 40-45 per cent of the industry revenue.
Maintaining a competitive edge
According to the report, these three factors may soften the blow:
- Frontloading of sales during April-August 2025
- Diversification to alternative geographies
- Limited capacities of competing nations, such as China, Pakistan and Turkey
- Additionally, deleveraged balance sheets will partly offset the impact on credit profiles, the report added.
“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 in FY26," said Manish Gupta, deputy chief rating officer, Crisil Ratings.
UK, EU emerge as alternate markets
The report said that increasing trade with the European Union (EU) and the United Kingdom (UK) will help manufacturers offset the lower offtake in the US. These geographies together accounted for around 13 per cent of India’s home textile exports in FY25.
India recently concluded its free trade agreement with the UK and is in advanced stages of discussions with the EU.
“Scaling up of revenue from the alternative export destinations will take time. Meanwhile, operating profitability on exports to the US over the remainder of this financial year may decline sharply. This will be a result of the Indian exporters absorbing part of the higher tariffs and some expected reduction in demand from the US due to inflation," said Gautam Shahi, director, Crisil Ratings.
Navigating challenges
The report further added that the industry's ability to navigate these challenges will depend on:
- Continuation of higher US tariffs on India against competing nations
- Policy support from the central government
- Demand trends in the US given inflationary pressures
- Cotton prices
 "real estate, realty firms")
 "Coal")
 "TurboML, AI, artificial intelligence")
 "youtube")
 "The year was a mixed bag for the real estate industry as housing supply slowed down but record investments came in. Industry experts believe that demand will stabilise as sales are likely to be lower compared to 2023.")
