Leader in fibre production, but growth, exports lagging: What’s ails India’s textile industry
By yash chouhan 2025-02-24 13:44:54
India is a leader in the manufacturing of fiber, but its textile sector is struggling with growth and exports.
India’s textile industry is among the largest in the world, spanning a vast value chain from cotton cultivation to high-end apparel manufacturing. However, despite its scale, India lags behind countries like China, Vietnam, and Bangladesh in textile exports, which benefit from vertically integrated supply chains, lower production costs, and simpler regulations.
Despite being a global leader in cotton and synthetic fibre production, India’s textile and apparel industry has recorded sluggish growth in recent years. Now, with rising sustainability and compliance requirements, costs are expected to rise further, especially for smaller firms.
Fibre to fabric in India — an overview
After China, India is the second largest producer of cotton, accounting for 24% of global production. Cotton cultivation engages around 60 lakh farmers, mostly across Gujarat, Maharashtra, and Telangana. The entire cotton textile value chain—from processing raw fibre and spinning yarn to weaving fabric, dyeing, and stitching—employs over 4.5 crore people.
While fibre consumption in India tilts heavily towards cotton, the textile industry also consumes other natural fibres like wool and jute. India is also the world’s second largest producer of man-made fibres (MMF), with Reliance Industries Ltd leading in polyester fibre and Aditya Birla Group’s Grasim Industries Ltd as the only domestic producer of viscose fibre.
Despite being a global leader in production, MMF consumption in India is just 3.1 kg per capita, compared to 12 kg in China and 22.5 kg in North America, according to a Ministry of Textiles note. Overall fibre consumption, including natural fibres and MMF, is also low at 5.5 kg per capita, compared to the global average of 11.2 kg.
Roughly 80% of India’s textile value chain is concentrated in MSME clusters, each with its own specialisation. For instance, Bhiwandi in Maharashtra is a key hub for fabric production, Tiruppur in Tamil Nadu leads in t-shirts and undergarments, Surat in Gujarat specialises in polyester and nylon fabric, and Ludhiana in Punjab is known for woolen garments.
Growth, exports in the red
The size of India’s textile and apparel industry cannot be understated—it contributes 13% to industrial production, 12% to exports, and roughly 2% to GDP. However, manufacturing in the textile and apparel industry has slightly contracted over the past 10 years, according to the Index of Industrial Production (IIP).
The labour-intensive garment and apparel sector exported goods worth $14.5 billion in FY24, down from $15.5 billion in FY20. Companies like Shahi Exports Pvt Ltd, Gokaldas Exports Ltd, and PDS Ltd are leading players in this sector.
Low export competitiveness
India lags behind China, Vietnam, and Bangladesh in textile exports, largely due to higher production costs. For instance, Vietnam exported apparel worth $40 billion in 2023. These countries benefit from vertically integrated supply chains, allowing them to manufacture garments at far more competitive prices.
One key challenge for India is its fragmented cotton supply chain, spread across multiple states, driving up logistical costs and hindering large-scale production.
The sustainability angle
“Today, the world is increasingly recognising the importance of a sustainable lifestyle, and the fashion industry is no exception… I firmly believe that the textile industry must embrace the principles of maximising resource efficiency and minimising waste,” Prime Minister Narendra Modi said at the textile trade fair Bharat Tex last week.
“In general, the costs for the textile industry are likely to rise over the coming years. A global structural shift towards sustainable sourcing would drive this. Often, such a shift is necessitated by regulatory changes. The EU, for instance, has as many as 16 pieces of legislation spanning the entire fashion value chain, which came into force between 2021 and 2024. As the EU accounts for nearly 20 per cent of our exports, such a shift poses a challenge for small enterprises who need to shift to environmentally sustainable production methods,” the Survey said.
In his speech, Modi highlighted that India’s textile recycling market is projected to reach $400 million, while the global recycled textile market is expected to touch $7.5 billion.
“Today, crores of garments become obsolete every month worldwide, with a significant portion falling into the category of ‘fast fashion waste’. This refers to clothing discarded simply due to changing fashion trends. These garments are dumped in various parts of the world, posing a severe threat to the environment and ecosystems.
