Introduction

India's textile industry is one of the largest in the world, covering everything from raw fibre production to high-end apparel. It plays a key role in the economy, contributing significantly to GDP, employment, and exports. However, despite its strengths, India lags behind competitors like China, Vietnam, and Bangladesh, which benefit from lower costs, integrated supply chains, and simpler regulations.

At the same time, rising domestic demand, shifting global trade patterns, and a growing focus on sustainability present new opportunities for India to expand its market share. This article explores the current landscape of the industry, its key challenges, and what lies ahead.

The India's Textile Industry

Production and Employment

India is a global leader in cotton production, accounting for 24% of global output and employing 60 lakh farmers, mainly in Gujarat, Maharashtra, and Telangana. The textile value chain—including spinning, weaving, dyeing, and garment production—provides jobs for over 4.5 crore people, including 35.22 lakh handloom workers.

Beyond cotton, India is the second-largest producer of man-made fibres (MMF), with major companies like Reliance Industries Ltd dominating polyester production and Aditya Birla Group’s Grasim Industries Ltd leading in viscose fibre. However, per capita MMF consumption in India remains low at 3.1 kg, compared to 12 kg in China and 22.5 kg in North America.

The industry is concentrated in MSME clusters, each specializing in different products:

• Bhiwandi, Maharashtra – Fabric production
• Tiruppur, Tamil Nadu – T-shirts and undergarments
• Surat, Gujarat – Polyester and nylon fabrics
• Ludhiana, Punjab – Woolen garments

These hubs form the backbone of India’s textile ecosystem, supporting millions of jobs and businesses.

Market Growth and Future Projections

Domestic Market Expansion

India’s textile and apparel sector is on a steady growth path, driven by increasing domestic demand, urbanization, and government support.

• The textile and apparel market is projected to grow at 10% CAGR, reaching US$ 350 billion by 2030.
• The home textile industry is expected to expand at 8.9% CAGR, reaching US$ 23.32 billion by 2032.
• The technical textiles market, which includes fabrics used in defense, healthcare, and sports, has a 10% CAGR.
• The medical textiles market for drapes and gowns is set to grow at 15% CAGR, reaching US$ 22.45 million by 2027.
• The composites market, used in industries like aerospace and automotive, is expected to hit US$ 1.9 billion by 2026, growing at 16.3% CAGR.

Global Market Trends

• The global apparel market is projected to grow at 8% CAGR, reaching US$ 2.37 trillion by 2030.
• The global textile and apparel trade is expected to reach US$ 1.2 trillion by 2030, growing at 4% CAGR.

India's potential to capture a larger share of this expanding market depends on its ability to boost competitiveness, streamline supply chains, and adopt sustainable practices.

India’s Position in Global Exports

India is the third-largest textile and apparel exporter, yet its exports have remained relatively flat compared to its fast-growing competitors.

Export Trends

• Total textile exports in FY24 stood at US$ 35.9 billion.
• Apparel exports reached US$ 14.23 billion, while cotton textiles (including home textiles) totaled US$ 12.3 billion.
• The US and EU account for nearly 50% of India’s textile exports.
• In FY25 (April-June), total textile exports were US$ 9.17 billion, while apparel exports stood at US$ 2.24 billion.

Competition from Other Nations

• Vietnam exported apparel worth US$ 40 billion in 2023, far exceeding India’s exports.
• Bangladesh and China have cost advantages due to vertically integrated supply chains, whereas India’s fragmented production system increases costs.

If India aims to close this gap, addressing inefficiencies and improving global trade competitiveness will be essential.

Challenges Facing the Textile Industry

1. Slowing Manufacturing Growth

While India's textile sector is vast, its manufacturing growth has been sluggish in recent years.

• Between FY15 and FY19, textile manufacturing grew at a slow 0.4% CAGR, while the apparel sector expanded at 7.7% CAGR.
• From FY20 to FY24, the textile sector contracted by 1.8% annually, while apparel manufacturing shrank by 8.2%.
• The post-COVID slowdown, along with global economic uncertainty, has hit MSMEs, particularly in Tamil Nadu, the hardest.

2. High Production Costs and Raw Material Prices

• Polyester fibre in India is 33-36% costlier than in China.
• Viscose fibre is 14-16% more expensive than in China.
• Quality Control Orders (QCOs) have restricted the import of cheaper alternatives, making production more expensive.

3. Complex Regulations and Export Barriers

• Complicated customs procedures make exports cumbersome, while competitors like China and Vietnam benefit from streamlined regulations.
• Lack of Free Trade Agreements (FTAs) with key markets puts Indian exporters at a disadvantage compared to Bangladesh and Vietnam.

4. Sustainability and Environmental Compliance

With sustainability becoming a priority in global fashion, India faces increasing compliance requirements.

• The EU has introduced 16 sustainability regulations affecting sourcing, energy use, and recycling.
• Major brands now demand greater traceability, water conservation, and reduced carbon footprints from suppliers.
• The textile recycling market in India is projected to reach US$ 400 million, while globally, it is expected to hit US$ 7.5 billion.

Shifting towards greener practices will not only help India maintain access to key export markets but also create new growth opportunities.

The Road Ahead:

1. Strengthening Domestic Production and Export Competitiveness

• Investing in technology and automation to enhance efficiency and reduce costs.
• Encouraging vertical integration to streamline production and improve cost efficiency.
• Simplifying export procedures to make Indian textiles more competitive globally.

2. Embracing Sustainability and Circular Economy

• Promoting circular fashion to tackle growing textile waste, which is expected to reach 148 million tonnes by 2030.
• Expanding textile recycling initiatives to reduce environmental impact and align with global standards.

3. Policy Support and Government Initiatives

• Strengthening Production-Linked Incentive (PLI) schemes for MMF and technical textiles.
• Negotiating trade agreements with key global markets to expand export opportunities.
• Investing in R&D and skill development to drive innovation and product differentiation.

Conclusion

India’s textile industry remains a cornerstone of its economy, employing millions and contributing significantly to exports. However, to stay competitive, the sector must address rising production costs, fragmented supply chains, and stringent sustainability regulations.

By investing in innovation, streamlining processes, and embracing sustainability, India can strengthen its position in the global textile trade. With the right policies and industry collaboration, the sector is poised for significant growth in the coming decade, securing its place as a global leader in textiles and apparel.

Source: indianexpress.com