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Reduction in impact of Covid-19's third wave, as well as accelerated re-opening activities, will boost textile demand in FY23, said India Ratings and Research (Ind-Ra).

The ratings agency cited that reduction in logistics issues for export demand will aid in keeping healthy demand.

"Domestic demand for all the textile sub-sectors has continued to improve from 2QFY22, after a slight dip in 1QFY22. The increased demand momentum along with the supply chain issues has increased the realisations," it said.

"Demand for cotton remained all-time high in 2HFY21, leading to reduced opening stock for the new cotton season. The rise in prices of cotton has led spinners to accumulate the stock."

Furthermore, it said that demand for MMF (man-made fibre) has continued to increase, mainly due to the rise in cotton prices, leading to a shift of demand from cotton to MMF, to an extent.

"The demand momentum sustained for home textiles in the domestic market because of improved consumer spending."

In addition, the agency cited that textile exporters in the cotton yarn segment continued to witness an improvement during 7MFY22 with volumes exceeding 47 per cent YoY over FY21.

"Ind-Ra expects export volumes to remain higher for FY22 over FY20 and FY21, on back of an increasing demand for Indian yarn.

"The export of fabric and apparel also recovered to the Pre-Covid levels during 8MFY22 and is likely to sustain with the opening up of economies and the adoption of 'China Plus One' strategy by importing countries."