India’s textile industry is among the country’s oldest links to the global economy. From muslin that captivated European courts to handlooms that powered colonial trade, cloth once defined India’s commercial identity. Even today, textiles remain one of the largest sources of employment after agriculture, supporting tens of millions of workers across spinning, weaving, processing, and garmenting.
Yet heritage has not translated into contemporary competitiveness. Over the past two decades, India’s position in global apparel trade has steadily weakened, despite abundant labour, inherited skills, and a vast domestic market. Structural rigidities and policy choices have prevented these strengths from being converted into export dominance.
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How peers surged ahead
The contrast with competitor nations is stark. In 2023, China exported garments worth about $113 billion, Bangladesh around $51 billion, and Vietnam close to $39 billion. India managed barely $17 billion. This gap cannot be explained by demand alone. Global buyers continue to source from labour-abundant countries, but they increasingly favour those aligned with modern production systems.
The decisive shift has been towards synthetics, fast fashion, and year-round production. While competitors adapted, India remained locked into a cotton-centric mindset, reinforced by policies that actively discouraged the use of man-made fibres.
Why synthetics now dominate global trade
Nearly two-thirds of global apparel trade now involves synthetic and blended fabrics. These fibres dominate winterwear, sportswear, and fast-fashion segments that demand speed, consistency, and scale. Vietnam and Bangladesh built low-cost, integrated supply chains around polyester and viscose to meet this demand.
India moved in the opposite direction. High import duties on polyester and viscose, frequent anti-dumping actions, and sweeping quality control orders restricted access to raw materials. Small and mid-sized firms were priced out of synthetics precisely when global buyers were demanding them most.
Textile industry: Seasonal factories and stalled wages
The consequences of this policy bias are visible on factory floors. Most Indian garment units operate at full capacity only during the spring–summer season, when cotton garments dominate orders. During autumn and winter, when synthetic apparel drives global demand, machines fall silent.
Fixed costs continue year-round, but revenues do not. This seasonal utilisation has depressed productivity, constrained scale, and contributed to wage stagnation. India’s apparel sector thus remains trapped in a low-margin, low-growth equilibrium.
Why speed, not just cost, decides export orders
Price competitiveness alone no longer determines sourcing decisions. Global brands increasingly value lead time, delivery reliability, and inventory risk reduction. India continues to lose fast-fashion orders not because its factories are uncompetitive on cost, but because they are slow.
Port dwell times, fragmented inland logistics, and cumbersome customs procedures stretch production cycles beyond what trend-driven apparel can tolerate. Vietnam and Bangladesh consistently deliver shorter order-to-shipment timelines. Without systematic reductions in logistics friction and turnaround time, capacity will not translate into contracts.
Policy correction finally underway
There are early signs of course correction. Over the past year, the government has begun dismantling some of the barriers that constrained the sector. According to Ajay Srivastava of the Global Trade Research Initiative, quality control orders have been withdrawn on over 20 synthetic inputs, restoring access to global fibres and yarns. Input prices are easing, improving cost competitiveness.
Labour reforms have also lowered scale barriers. The threshold under the Industrial Disputes Act has been raised from 100 to 300 workers, while states such as Tamil Nadu, Karnataka, and Gujarat have enabled more flexible work schedules. These changes address long-standing constraints on capacity expansion.
Trade realism replaces export romanticism
Trade policy is inching towards realism. Indian garments have long faced duties of 8–12% in the UK and European Union, and as high as 22% in the United States, while competitors such as Bangladesh and Vietnam enjoyed preferential access. The India–UK free trade agreement, along with ongoing negotiations with the EU and the US, may narrow this gap.
The correction of inverted GST duty structures—which taxed fibres and yarn more heavily than finished garments—has further eased cash-flow pressures. Together, these steps suggest that India’s textile sector is no longer running with policy shackles.
Compliance has become a trade barrier
Quality today extends beyond fabric finish and stitching. For European and UK buyers, environmental compliance, chemical management, labour standards, and traceability have become decisive filters. Mandatory due-diligence regimes and buyer-led audits now shape sourcing decisions as much as tariffs.
Many Indian units—especially in processing—lack systems to document water use, effluent treatment, worker conditions, and supply-chain transparency. Competing effectively will require investment in compliance infrastructure and credible third-party verification, not just lower prices.
The yarn-export paradox
One persistent distortion remains. India continues to export low-value fibre and yarn instead of finished garments. Incentive structures often make it cheaper to sell yarn abroad than domestically, leaving garment manufacturers short of affordable inputs.
A country serious about job creation and value addition must tilt decisively towards exporting clothing, not raw material. Without correcting this bias, scale garmenting will remain elusive.
Fragmentation prevents scale
India’s textile ecosystem remains fragmented across spinning, weaving, processing, and garmenting, with too few large, integrated exporters capable of anchoring clusters. This fragmentation raises transaction costs, weakens bargaining power with global buyers, and slows technology diffusion.
China’s rise was built around large anchor firms that pulled entire supplier ecosystems along with them. India’s challenge is not merely to add capacity, but to enable integration and consolidation at scale.
Fabric and processing: the missing middle
Despite being a major yarn exporter, India commands barely 6% of the global fabric market. Weaving and processing remain informal and technologically outdated. Modern apparel competitiveness depends on consistent quality, speed, and volume—outcomes that fragmented processing cannot deliver.
India needs a push towards large, modern fabric and processing hubs that integrate spinning, weaving, finishing, and garmenting, rather than treating each segment in isolation.
Parks and incentives must deliver integration
Schemes such as PM MITRA parks and the PLI programme for man-made fibre apparel and technical textiles are directionally correct. Their success, however, will depend on execution. These initiatives must prioritise common processing infrastructure, effluent treatment, testing labs, and logistics integration, rather than devolving into real-estate-led industrial zones.
Without governance structures that reduce coordination failures and enforce standards, industrial parks will replicate existing inefficiencies instead of correcting them.
Processing needs patient capital
Modern dyeing, finishing, and printing are capital-intensive and compliance-heavy. Expecting small firms to upgrade without access to affordable finance is unrealistic. Targeted credit lines, risk-sharing mechanisms, and common facility centres are essential to modernise processing at scale.
Without addressing the financing constraint, India will remain a yarn exporter with a shallow value chain, regardless of policy intent.
Export rules that punish scale
Export procedures also require reform. Under the current advance authorisation system, exporters are expected to link every imported input to specific export orders—an administrative impossibility for large factories handling thousands of styles.
Competitors such as Bangladesh operate simpler, value-based systems that allow imports up to a fixed percentage of export value. India must move in this direction if it wants scale players to thrive.
Even low-value accessories such as buttons, zippers, and labels are subject to onerous documentation and delays. In fast fashion, speed is as critical as cost. A shift towards self-declaration and risk-based customs checks would reduce turnaround times and improve competitiveness.
Learning from missed opportunities
Japan offers a cautionary lesson. Despite zero-duty access under a free trade agreement for over a decade, Indian textile exports barely grew. The constraint was not tariffs, but the inability to meet stringent expectations on quality, delivery discipline, and workflow reliability.
Competing with China, Vietnam, and Bangladesh will require Indian firms to invest in compliance, design capability, and buyer trust.
As global brands diversify supply chains away from China in search of resilience and political stability, India is better placed than ever to benefit. But opportunity alone will not deliver outcomes.
Unless policy remains aligned with synthetics, scale, speed, and finished exports, India risks repeating past mistakes. The revival of textiles will not come from nostalgia for cotton, but from aligning production with how global apparel trade now works.