Indian Exports: Revenue of leather apparel and accessories sector to shrink 7-8% in fiscal 2024, Retail News, ET Retail

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New Delhi: Revenue of the leather apparel and accessories sector, which comprises bags, belts, and harnesses is set to decline 7-8 per cent in the fiscal year 2024, Crisil Ratings said in a press release on Wednesday.

The decline in revenue is expected because of the slowdown in consumer demand in Europe and the United States, which are key markets for Indian exporters. 85-90 per cent of the USD 2.25 billion Indian leather apparel and accessories produced in the country are exported, with Europe and North America accounting for 75 per cent of orders.

“Demand for discretionary goods in key export markets — essentially the advanced western economies — has been shrinking because of pinching inflation and rising recession fears. Though domestic demand for the leather apparels and accessories segment remains resilient, the overall sectoral revenue is seen declining in the medium term,” said Rahul Guha, director, CRISIL Ratings.

As costs remain high, operating margins of companies are expected to compress by 150 basis points this fiscal and will remain rangebound at 6-6.5 per cent over the medium term, Crisil said.

The rating firm added that given the increased raw material cost, inventory holding has become costlier. Additionally, due to lower cash generation, the working capital requirement at the sector level will be 15-20 per cent higher in the near term.

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