India's textile industry has undergone a remarkable transformation over the past few decades. Once known primarily for its traditional fabric production, India has now emerged as one of the largest textile manufacturers and exporters globally. In 2023, the country’s textile sector was valued at approximately $150 billion, with substantial expectations for growth, driven by both domestic demand and international market dynamics. As India expands its role in the global textile industry, it faces both challenges and opportunities that could reshape its future position in the global supply chain.
The Indian textile industry is one of the most significant contributors to the country’s GDP, accounting for approximately 2-3% of the national output. This sector provides direct employment to more than 45 million people, making it one of the largest employment sectors in India. It is also a major source of foreign exchange earnings, particularly through textile exports, which were valued at $44 billion in 2022-2023. India’s textile industry is diverse, producing a range of products, including cotton, wool, silk, jute, and synthetic fibres, as well as garments, home textiles, and technical textiles.
India has long held a competitive advantage in cotton production, which forms the backbone of its textile industry. The country is the largest producer of cotton globally and a leading exporter of cotton-based fabrics. This advantage, combined with low labour costs and the availability of raw materials, positions India as a key player in the global textile market.
India’s domestic textile market is growing rapidly, driven by several factors. A growing middle class, rising disposable incomes, and an increasing appetite for both traditional and modern fabrics have spurred demand for textiles within the country. Urbanisation is also contributing to the growth of the textile market, with consumers in cities demanding a wide variety of products, from everyday wear to premium fashion and home textiles.
The rise of India’s fashion industry has further boosted domestic consumption. A shift in consumer preferences, particularly towards branded and higher-quality textiles, has led to the expansion of the mid-to-premium market segments. Major Indian textile brands, such as Raymond and FabIndia, are tapping into these new demands, providing an increasing variety of high-end products like fine cotton, silk, and wool blends. The domestic market is expected to continue expanding at a steady rate, benefiting from India’s large and youthful population and growing urbanisation.
India has firmly established itself as a global player in the textile export market. The country is the second-largest exporter of textiles after China, accounting for around 5% of the global market share. The main destinations for Indian textile exports include the United States, the European Union, the UAE, and neighbouring countries like Bangladesh and Sri Lanka. The primary exports include cotton fabrics, garments, home textiles, and technical textiles.
Despite the challenges posed by the COVID-19 pandemic, India’s textile exports bounced back quickly, supported by strong government initiatives, competitive pricing, and recovery in global demand. Additionally, the global trend towards diversification of supply chains is benefiting India, as international buyers seek alternatives to China. India’s competitive advantage lies in its ability to offer high-quality products at competitive prices, especially in low-cost product categories like cotton-based fabrics and garments.
India’s position in the global textile supply chain is steadily strengthening. As China’s dominance in the textile sector starts to face challenges—due to rising labour costs, stricter environmental regulations, and ongoing geopolitical tensions—India is poised to benefit from these shifts. The “China+1” strategy, where companies diversify their sourcing to include countries other than China, has led many global buyers to turn to India for their textile needs.
The Indian government has been proactive in supporting this transition, with initiatives like the Atmanirbhar Bharat (Self-Reliant India) programme and the Production Linked Incentive (PLI) Scheme aimed at promoting manufacturing within India. These policies are designed to increase the competitiveness of India’s textile sector by improving infrastructure, incentivising investments, and encouraging the adoption of modern technologies.
Despite India’s strengths, competition with China remains a significant challenge. China’s textile industry benefits from scale, technological advancements, and a well-established infrastructure that supports mass production. While India cannot yet match China’s output in terms of volume, it has carved out its niche in certain market segments. India’s strength lies in its high-quality cotton production, the growing popularity of eco-friendly textiles, and its ability to cater to both the low-cost and premium segments.
Moreover, as global consumers become increasingly concerned with sustainability, India is well-positioned to capitalise on the growing demand for eco-friendly textiles. Indian manufacturers are increasingly adopting sustainable practices, such as using organic cotton, water-efficient dyeing technologies, and recycled materials. This focus on sustainability, coupled with the growing demand for natural and organic fabrics, gives India a competitive edge in the premium and eco-conscious segments of the market.
Sustainability is a key trend shaping the future of India’s textile industry. As global awareness of environmental and social issues continues to rise, India’s textile manufacturers are adapting by embracing eco-friendly production practices. Initiatives like the Sustainable Development Goals (SDGs) and the Global Organic Textile Standard (GOTS) have prompted many Indian textile producers to adopt more sustainable processes, such as the use of organic cotton, environmentally friendly dyes, and water-efficient production technologies.
India has already begun to see the benefits of focusing on sustainability. Consumers, particularly in Europe and North America, are increasingly seeking ethically produced textiles, which has opened up new export opportunities for Indian manufacturers. India’s ability to produce both low-cost and environmentally friendly textiles positions it uniquely in the global market, with the potential for further growth in the sustainable fashion and technical textile sectors.
India’s textile industry is poised for continued growth in the coming years. As global demand for textiles rises, India’s competitive advantages—low labour costs, a large workforce, and a rich supply of raw materials—will continue to fuel its expansion. Furthermore, as the world shifts towards more sustainable practices, India’s growing focus on eco-friendly production will help it capture a larger share of global markets, particularly in Europe and North America.
India’s increasing share of the global textile market, combined with its strategic partnerships, growing government support, and focus on sustainability, indicates that the country will continue to play a key role in the industry. Although competition with China remains intense, India’s diversified approach to low-cost and high-value products, as well as its focus on sustainability, will ensure that the country remains a formidable player on the global stage.
By 2028, India is expected to solidify its position as the second-largest textile exporter globally, with the potential to challenge China’s dominance in specific sectors. The country’s textile industry, supported by strong domestic consumption and growing global demand, is set to be a key driver of its economic growth in the coming decades.
