India’s Textile Industry At The Crossroads: Opportunities In A Shifting Global Supply Chain

By Rajeev Gupta, Joint Managing Director, RSWM Ltd.

The biggest benefit of the events in the 2025 domestic textile industry was the diversification of its export markets. The global market chaos caused by the United States’ reciprocal trade tariffs is well known. As a result, demand across regions was volatile and uneven. A partial state of normalcy was restored in February 2026 after the US Supreme Court struck down these tariffs. It was only then that a sense of guarded optimism was felt in the global markets.

Global Volatility, Domestic Stability
Despite the global volatility, the domestic textile and apparel exports segment maintained its growth momentum. Broad market diversifications, value additions and precise policy interventions ensured strong performance in handicrafts, readymade garments (RMGs) and manmade fibres (MMFs) across several global markets, helping sustain the export numbers.

In the calendar year 2025, textile and apparel exports had stable numbers of $37.54 billion, with 17.5% cumulative growth in handicrafts, alongside 3.5% growth in both RMG and jute products. Irrespective of the geopolitical battles and inflationary trends in some overseas regions, the domestic sector’s stability highlights its inherent strength and diversified export destinations. Collectively, the domestic textile and apparel segment was valued at almost $179 billion. It also accounts for about 2% of the nation’s GDP, almost 11% of its manufacturing GVA (gross value added) and more than 8% of exports. Across the value chain, the industry directly employs over 45 million people, making it one of the largest employment generators in the country.

In the past year, steady domestic consumption has helped cushion the segment against global demand slowdowns. Export performance remained uneven, with traditional markets such as the US, UK and the EU showing moderate volumes but continued pricing pressure. At the same time, exporters faced increasing exposure to stringent compliance requirements and evolving tariff risks.

Disruptions and Diversification of Export Markets
As noted earlier, the United States’ reciprocal tariffs badly impacted the Indian market. This was no surprise since the US contributes to almost 29% of the country’s textile exports. Therefore, price competitiveness was hit by higher tariffs in the apparel, home textiles and MMF sections. From the garment hubs of Tiruppur in Tamil Nadu to Surat in Gujarat, order cancellations, renegotiations and margin reductions were reported regularly. Consequently, exporters ignored fast volume growth, instead focusing on protecting margins, streamlining inventories and exerting greater control over product specifications.

Due to the uncertainties of the US market, Indian textile manufacturers began increasing exports to more than 110 export zones. With an eye on long-term prospects, this strategy led to steady shipments across Africa, Latin America, the Middle East and ASEAN markets, compensating for the drop in the traditional markets.

MMFs and Policy Hurdles
In recent years, a major trend has been the steady transition of worldwide fibre consumption towards MMF and its blends because of their dur

• man-made fibres (MMF) India

ability, versatility and overall performance. For India, which has traditionally focused on cotton, the implications are huge as the country remains one of the largest cotton producers globally. Aware of the ongoing trends, domestic textile producers have taken steps to boost the output of MMF apparel and technical textiles.

Accordingly, textile producers have capitalised on government programmes like the PLI (Production Linked Incentive) scheme and the PM MITRA (Pradhan Mantri Mega Integrated Textile Region and Apparel) parks, the latter initiative functioning as an integrated textile ecosystem. Nonetheless, these policy benefits are not available uniformly throughout the value chain. While textile manufacturing has gained, allowing downstream segments like garments to recover faster, textile engineering confronts structural barriers.

Further, while inverted or zero-duty structures on imported machinery may have facilitated short-term procurement for mills, it has increased the pressure on local machinery manufacturers since they lack demand-linked incentives or financial subsidies. These policies can discourage investments in indigenously manufactured textile machinery. If textile exports are to gain momentum, such policies must be removed at the earliest.

The Challenge-cum-Opportunity of Exports
As we advance, India’s export dominance will depend on how well it balances the production of cotton-heavy fabrics in favour of MMFs and their blends. With barely 4% stake in the worldwide textile trade, India only contributes modestly to this $550 billion textile market. Significantly, in the last five years, textile and apparel exports globally have moved between $500 billion and $550 billion. The range-bound movement highlights the extremely competitive nature of the textile market, wherein gains and losses of rival nations are counterbalanced.

Although America’s reciprocal tariffs hit India hard, putting it at a disadvantage versus countries such as Vietnam and Bangladesh that had lower import duties, it has turned out to be a big blessing in disguise. This situation has prodded India to speed up its FTAs (Free Trade Agreements) with the UK, the EU and other regions.

Nevertheless, more challenges seem to be around the corner. The Israel-US war with Iran has worsened global hurdles and uncertainties. This could severely affect orders, causing a double-digit drop in textile exports. Given this scenario, the Central government should announce interim support measures that can help the weaker industry players till the global situation becomes more peaceful and stable.

While the short-term prospects may seem bleak, there is no doubt that export opportunities abound for a vibrant textile powerhouse like India. We must only be ready to grab the opportunity when it arrives.