The report says that higher discounts and front-loading of exports led to higher costs (transport and packaging), which also affected margins
Driven by slower global demand and the United States (US) tariffs, the demand outlook for the textile sector is uncertain. A report noted that higher discounts and front-loading of exports led to higher costs (transport and packaging), which also affected margins in the first quarter of the current financial year (Q1FY26).
Within textiles, the spinning industry is also impacted by higher domestic cotton prices, the report added. It noted that this is compounded by the import duty on imported cotton, making manufacturing uncompetitive compared to other Asian exporters. Outlook is uncertain, with some buyers adopting a more cautious stance.
In the consumption sectors, the fast-moving consumer goods (FMCG) sector witnessed a broadly similar demand trend compared to the previous quarter. Rural markets continued to outpace urban markets, with a preference towards premium products. Some firms did note signs of demand recovery in urban areas, which is likely driven by lower inflation.
Due to slower growth in expenditure compared to income, the manufacturing sector’s profit margin improved. The sector’s gross margin improved to 38.2 per cent in Q1FY26, up from 37.8 per cent in Q4FY25 and 36.5 per cent a year ago.
The report emphasised that demand for the capex-related sectors was largely positive, aided by front-loading of capex by the Centre and States. The cement sector witnessed strong commercial and infrastructure demand, with the latter driven by expressway and metro projects. However, housing demand in certain parts of India was impacted by the early onset of monsoon and geopolitical tensions in May.
