ANNUAL REPORT Indian Textile and Apparel Industry 2021

1 1 Indian Textile and Apparel Industry 2021 ANNUAL REPORTG lobal GDPG lobal Textile & Apparel Industry OverviewIndian Textile & Apparel Industry OverviewImpact of Covid on Indian Textile & Apparel Industry Indian Textile Industry : Structure and Supply Scenario Financial Health of Indian Textile IndustryContentDISCLAIMER: This document is a copyright of Wazir Advisors. No part of this publication may be reproduced, stored in, or introduced into a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written per-mission of the copyright owner. Wazir Advisors has made every effort to ensure the accuracy of information presented in this document. However, neither Wazir Advisors nor any of its office bearers or analysts or employees can be held responsible for any financial consequences arising out of the use of information provided herein.

2 However, in case of any discrepancy, error, etc., same may please be brought to the notice of Wazir Advisors for appropriate The year 2020 has been the most challenging year in our lifetimes. What started as a promising year forour Industry quickly turned into a difficult one. COVID-19 pandemic brought the entire world to a standstill,equitably affecting markets and supply chains globally. Consumer purchase of Textile and Apparel were hit badly due to the global lockdowns and economic global Apparel consumption is estimated to have shrunk by 22% in 2020. However, 2021 looks brightergiven the onset of vaccination drives, growth in e-commerce sales of Apparel , and resumption of globalsupply chains. We present to you our review of the Indian Textile and Apparel Industry in 2020. This document covers keyindustry statistics - consumption, production, export, import, and financial : A year that was 2 Global Industry Overview3 ANNUAL GDP Change (%)Global GDP ContractionCountry201920202021 Pre Covid ForecastRevised EstimatePre Covid ForecastRevised Source: IMF World Economic Outlook Update, January 20214 Value US$ billionGlobal Apparel MarketRegion20192020Y-o-Y ChangeProjected CAGR 2019-252025 (P)EU-27264219-17%1%280 United States235171-27%2%265 China181173-4%11%340 Japan10683-21% ,6351,280-22% ,007 Global Apparel market shrunk by 22%, coming down from US$ 1,635 billion in 2019 to US$ 1,280 billion in consumption is expected to reach to pre-Covid levels over next couple of years and then retrace its growth path to reach US$ 2,007 billion by Source.

3 Published Data & Wazir Analysis5 Category-wise Share of Global T&A Trade (US$ Billion)Global Apparel MarketData Source: UN Comtrade & Wazir AnalysisThe global Textile and Apparel trade has grown at a CAGR of 4% since 2005 to reach US$ 839 billion in 2019 and is expected to reach US$ 1 trillion by 2025, growing at a CAGR of 3%. Apparel dominated T&A trade with a 58% share in the overall trade value, followed by fabrics with a share of 19%.415253536021272926301141291481601802 6734844448260032435051607020052010201520 192025 (P)FibreYarnFabricApparelHomeTextilesOth erTotal6%3%19%58%6%8%2019 FibreYarnFabricApparelHomeTextilesOthers 274252665026417768391000 CAGR4%CAGR3%Global T&A TradeCategory Share6 Leading Textile and Apparel Exporters (2019)Global Textile and Apparel TradeCountryExportsShare (%) China s share in global T&Atrade in 2019 was 34%.

4 Theshare has come down from39% in 2015. Vietnam and Bangladeshwere the second and thethird largest Textile and Apparel exporters in 2019, respectively. India is the 5th largestexporter of T&A in the worldwith exports worth US$ Source: UN Comtrade & Wazir AnalysisValue US$ billion7 Leading T&A Exporters Category-wiseFibreUSAA ustraliaChinaExport Value (US$ Bn) Share20%10%9%Home TextilesChinaIndiaTurkeyExport Value (US$ Bn) Share37%11%8%YarnChinaIndiaVietnamExport Value (US$ Bn) Share21%14%12%ApparelChinaBangladeshViet namExport Value (US$ Bn) Share31%8%7%FabricChinaItalyS. KoreaExport Value (US$ Bn) Share45%5%5%Data Source: UN Comtrade & Wazir Analysis8 Indian Industry Overview9 India s Domestic Textile and Apparel Market Size (US$ billion)India s Domestic Textile and Apparel Market Indian domestic Textile and Apparel market is estimated at US$ 75 billion in 2020-21.

5 The market fell 30% from US$ 106 billion in market is expected to recover and grow at 10% CAGR from 2019-20 to reach US$ 190 billion by constitutes ~73% share of the total T&A market in (E)2025-26 (P)ApparelTechnical TextilesHome TextilesTotalCAGR 10%CAGR 10%-30%Data Source: DGCI&S and Wazir Analysis10 Indian Textile and Apparel Exports (US$ billion) Indian Textile and Apparel ExportsIndia s T&A exports reached US$ billion in to the impact of Covid-19, India s T&A exports are expected to fall around 15% to reach US$ billion in s exports of T&A are expected to grow to US$ 65 billion by 2025-26, growing at a CAGR of 11%. (Est)2025-26(P)FiberYarnFabricApparelHom e TextilesOtherTotalCAGR 11%CAGR 5%-15%Data Source: DGCI&S and Wazir Analysis11 Indian Textile and Apparel Imports (US$ billion) Indian Textile and Apparel ImportsIndia s T&A imports were US$ billion in 2019-20.

6 However, they are expected to decline by around 35% to reach US$ billion in imports of T&A are expected to grow at a CAGR of approx. 10% to reach US$ billion by (Est)2025-26(P)FiberYarnFabricApparelHom e TextilesOtherTotal-35%CAGR 10%CAGR 9%Data Source: DGCI&S and Wazir Analysis12 Manufacturing ShutdownThe Industry faced a complete shutdown for around 2-3 months, while a few manufacturers who dedicated their production systems for PPE manufacturing were permitted to function. However, most of the units operated at sub-optimal utilization levels for next several SuspendedDisrupted logistics and frozen external trade caused due to the pandemic affected the entire value chain alike. India s April and May 2020 net trade were around 50% lower month-on-month compared to that of the previous to the pandemic, all economic activities except for the essential goods and services came to a standstill.

7 The Textile and Apparel Industry was no exception to of Covid on Indian T&A IndustryCancelled OrdersDue to the uncertainty across the market, international and domestic buyers cancelled or suspended their orders, adding to the woes of the in Physical Retail SalesLockdown restrictions across the country resulted in a slump in the retail sales of Apparel for at least 4-5 months. Moreover, the festive and wedding season sales were deeply Consumer Trends EmergedIndia s e-commerce sale of goods and Apparel saw a steep rise in 2020, thanks to an increased market. Work-From-Home drove the demand for casual wear Apparel over Recovery in Domestic MarketConsumption in all the Apparel categories was impacted negatively in 2020. However, the pace of recovery for each category was wearKids wearLoungewearEthnic wearFormal wearParty, Evening & Occasion wearDenimInnerwearPace of RecoverySales for kids wear and casual wear recovered faster, while ethnic wear and formal wear were the worst hit segments14 Indian Textile Industry : Structure and Supply Scenario15 Indian Fibre Production Breakup (million Kg)Staple Fibre ProductionFibreProductionShare 2019-20 (%)CAGR 2015-19 (%)2015-162019-20 Cotton5,7505,75062%0%Silk2936< ,6901,68318%0%Natural Fibre7,5167,5140%Viscose Staple Fibre3425786%14%Polyester Staple Fibre8941,08512%5%Acrylic Staple Fibre107981%-2%Other MMSF54< ,3471,7657%Total Fibre8,8639,2791%India s total staple ibre production stood at 9,279 million kgs in 2019-20.

8 Data Source: Ministry of Textiles, GoI and Wazir analysis16 FibreExportsShare 2019-20 (%)CAGR 2015-19 (%)2015-162019-20 Cotton1,9391,05756%-14%Silk14141%-1%Wool 49261%-15%Others20629115%9%Natural Fibre2,2081,388-11%Viscose Staple Fibre2741488%-14%Polyester Staple Fibre19728915%10%Acrylic Staple Fibre54503%-2%Other MMSF16161%0%MMSF540503-2%Total Fibre2,7481,891-9%India s Fibre Exports (US$ million)Staple Fibre ExportsIndia exported fibre worth US$ 1,891 million in 2019-20, which has reduced at a CAGR of 9% since 2015-16. cotton occupied 70% share in total fibre exports in 2015-16, while this has reduced to 56% in s Polyester staple fibre exports have grown at a CAGR of 10% since Source: DGCI&S and Wazir Analysis17 India s Fibre Imports (US$ million)Staple Fibre ImportsFibreImportsShare 2019-20 (%)CAGR 2015-19 (%)2015-162019-20 Cotton3941,32856%35%Silk1591657%1%Wool32 424810%-6%Others861496%15%Natural Fibre9631,89018%Viscose Staple Fibre731125%11%Polyester Staple Fibre1131346%4%Acrylic Staple Fibre711004%9%Other MMSF951456%11%MMSF3514919%Total Fibre1,3142,38216%India imported fibre worth US$ 2,382 million in 2019-20, which has grown at a CAGR of 16% since imports of man-made staple fibre (MMSF) has grown at a CAGR of 9%.

9 Data Source: DGCI&S and Wazir Analysis18 YarnProductionShare 2019-20 (%)CAGR 2015-19 (%)2015-162019-20 cotton Spun Yarn4,1383,99671%-1%Blended & 100% non- cotton spun yarn1,5271,66329%2%Total spun yarn5,6655,7130%Polyester Filament Yarn 3,2053,9345% Indian Yarn Production (million Kg)Yarn ProductionIndia s total spun yarn production was 5,713 million kg in filament yarn (PFY) production has has grown at a CAGR of 5% since Source: Office of Textile Commissioner, Govt. of India and Wazir Analysis100% ANNUAL REPORT : Indian Textile and Apparel Industry 2021, is a copyright of Wazir Advisors19 FibreExportsShare 2019-20 (%)CAGR 2015-19 (%)2015-162019-20 cotton spun yarn3,5722,77458%-6%Man made spun yarn67168014%0%Other spun yarn1221383%3%(Silk, Jute)Total spun yarn4,3663,593-5%Viscose filament yarn52361%-9%Polyester filament yarn9141,04822%3%Nylon filament yarn10321%35%Other MMSF309461%-38%MMSF1,2851,162-2%Total Yarn5,6514,813-4%India s Yarn Exports (US$ million)Yarn ExportsIn 2019-20, India s total yarn exports stood at US$ 4,813 of spun yarn has declined at a CAGR of 5% since s Nylon filament yarn exports has grown at a CAGR of 35% between 2015-16 and Source.

10 DGCI&S and Wazir Analysis20 FibreImportsShare 2019-20 (%)CAGR 2015-19 (%)2015-162019-20 cotton spun yarn42191%-18%Man made spun yarn17733426%17%Other spun yarn23912610%-15%(Silk, Jute)Total spun yarn4594781%Viscose filament yarn5816113%29%Polyester filament yarn12717714%9%Nylon filament yarn76675%-3%Other MMSF32240231%6%MMSF5838078%Total Yarn1,0421,285100%5%India s Yarn Imports (US$ million)Yarn ImportsIndia imported US$ 1,285 million worth of yarn in s imports of viscose filament yarn saw a sharp rise between 2015-16 and 2019-20 at a CAGR of 29%.Data Source: DGCI&S and Wazir Analysis21 Fabric ProductionShare 2019-20 (%)CAGR 2015-19 (%)2015-162019-20 Mill Sector2,3152,0223%-3%Decentralized Sector62,26974,26697%5%Grand Total (Exc. Khadi, Wool & Silk)64,58476,2884% Indian Fabric Production (Million Sq.)