India's textile and apparel sector remains one of the country's largest employers and export earners, but it has struggled to expand its global footprint over the past decade and a half.
India's textile and apparel industry could be on the verge of a significant revival after years of losing ground in global markets, with favourable trade agreements, government incentives, tariff advantages and strong domestic demand creating conditions for a fresh growth cycle, according to a report by Emkay Research.
The brokerage said India's share in global apparel trade has remained largely stagnant at 3-4 percent over the past 15 years despite being one of the world's largest textile producers. However, it believes the sector is now approaching an inflection point that could help it regain competitiveness against major exporting nations such as China, Bangladesh and Vietnam.
"India has, traditionally, been a textile powerhouse but lost market share in the global apparel trade, which has been stagnant at at 3-4 per cent over the past 15 years. However, we believe India is at an inflection point to regain its lost glory," Emkay Research said in its report.
Policy push, trade deals driving optimism
India's textile and apparel sector remains one of the country's largest employers and export earners, but it has struggled to expand its global footprint over the past decade and a half.
According to Emkay Research, a combination of policy measures and structural changes is beginning to improve the industry's outlook.
The report highlighted the government's efforts to strengthen the domestic man-made fibre (MMF) ecosystem through Production Linked Incentive (PLI) schemes, PM MITRA textile parks and investments in petrochemical capacity. These initiatives are expected to improve supply-chain integration and reduce dependence on imported raw materials.
The brokerage also pointed to ongoing and proposed free trade agreements (FTAs) with key markets, including the European Union, the United Kingdom and Australia, as potential game changers for the sector.
FTAs could boost India's export competitiveness
Trade agreements are expected to play a crucial role in shaping the industry's next phase of growth.
According to the report, Indian textile exporters stand to gain significantly if import duties on Indian products are reduced or eliminated in major developed markets.
The proposed FTAs with the European Union and the United Kingdom are particularly important because they could help Indian exporters compete more effectively with rivals such as Bangladesh and Vietnam, which currently enjoy preferential market access in several regions.
Emkay Research said lower-duty or duty-free access could improve pricing competitiveness and help Indian manufacturers capture a larger share of global apparel and textile exports over the medium term.
Tariff advantage over China offers opportunity
The report also flagged changing global trade dynamics as a major opportunity for Indian exporters.
According to Emkay Research, Indian textile exporters currently enjoy a tariff advantage of around 7-8 percent in the US market compared with Chinese suppliers.
The advantage comes as global brands and retailers increasingly seek to diversify sourcing away from China amid geopolitical tensions, supply-chain disruptions and evolving trade policies.
Emkay said the tariff differential, combined with GST reforms, favourable import duties and stronger corporate balance sheets, could help Indian exporters secure a larger share of international orders.
Strong domestic demand provides resilience
While exports remain a key growth driver, the report noted that India's large and expanding domestic apparel market continues to provide stability for the sector.
The country's consumer demand has helped textile and apparel manufacturers navigate global disruptions, including the Covid-19 pandemic, the Russia-Ukraine conflict and volatility in international trade conditions.
"Backed by a robust domestic market, favorable USD-INR rate, and strong balance sheet, we believe domestic players would be able to absorb future shocks too," the report said.
According to Emkay, the combination of export opportunities and domestic consumption could provide a more balanced and sustainable growth trajectory for the industry.
Technical textiles seen as next growth engine
Beyond traditional apparel and garments, the report identified technical textiles as one of the most promising segments within the broader textile industry.
Technical textiles include specialised products used across sectors such as defence, healthcare, automotive, infrastructure, packaging and industrial manufacturing.
According to Emkay Research, the domestic technical textiles market recorded annual growth of around 7-8 percent between FY20 and FY26 projections. The brokerage expects growth to accelerate into double digits over the next five years.
The anticipated expansion is likely to be supported by government incentives, lower GST rates on man-made fibre products, rising industrial demand and improved export competitiveness through trade agreements.
Boost for manufacturing and jobs
The report said a revival in the textile sector would have implications beyond export growth.
A stronger textile and apparel industry could support employment generation, increase manufacturing output and strengthen India's position in global supply chains at a time when multinational companies are looking to diversify sourcing bases.
With policy support, improving trade access and favourable global trends, Emkay Research believes India may finally be in a position to reverse years of stagnation and reclaim a larger role in the global textile and apparel market.
However, the brokerage noted that the pace of infrastructure development, execution of policy initiatives and timely conclusion of trade agreements will be critical in determining whether the sector can fully capitalise on the emerging opportunities.
For now, it said, the long-term outlook for India's textile industry appears considerably brighter than it has in years.
(With inputs from agencies)
