India’s Textile Sector 2025: Weaving Tradition into Global Competitiveness 

Textiles in India are more than just an industry - they are a story. From the hand-spun khadi that powered India’s freedom movement, to the Banarasi sarees worn at weddings, to the sportswear stitched in Tirupur for global brands like Nike and H&M, textiles are woven into the nation’s identity. Today, the textile sector stands at a crossroads. It is one of India’s oldest industries, contributing 12% to total exports, employing over 45 million people, and supplying both tradition and technology to the world. Yet, while countries like Bangladesh and Vietnam are racing ahead in global markets, India must ask: how can its textile sector reinvent itself for the future?


This blog dives deep into the sector’s strengths, challenges, government policies, and the road ahead — so you can understand how this fabric of India’s past can also become the fabric of its future.

1. Why Textiles Matter?

Exports Backbone: India’s textiles and apparel exports totaled ₹2.8 lakh crore (approximately US $34.4 billion) in 2023–24, making it one of the country's top foreign exchange earners. For instance, Tirupur in Tamil Nadu, often referred to as the Knitwear Capital of India, contributes over 50% of India’s cotton knitwear exports alone.
Massive Employment Generator: The sector directly employs 45 million+ people, second only to agriculture. Additionally, approximately 100 million people are indirectly dependent on related activities, such as ginning, dyeing, transportation, and retail. Clusters like Surat (synthetics), Panipat (home textiles), and Bhagalpur (silk) sustain entire local economies.
MSME Power: Around 80% of production units are small and medium enterprises. For example, the handloom weavers of Varanasi and artisans of Kanchipuram thrive in the MSME ecosystem, though often struggling with credit and market access.
Market Scale: With a domestic market size of US $174 billion, textiles serve not only export demand but also India’s growing consumer base — from rural households buying khadi to urban millennials shopping fast-fashion on Myntra, Flipkart, or H&M.

2. Structure of the Sector:

India’s textile sector is vast and diverse, spanning both traditional and modern industries:

Cotton: India is the second-largest cotton producer in the world. Gujarat, Maharashtra, and Telangana are major cotton-growing states. The Kasturi Cotton India initiative, launched by the government, is an effort to brand Indian cotton globally as sustainable and premium quality.
Technical Textiles: A sunrise segment with applications in automotive (seatbelts, airbags), healthcare (PPE kits, surgical masks), and construction (geotextiles). For example, during the COVID-19 pandemic, India ramped up PPE production from almost zero to the second-largest producer in the world within six months.
Silk: India is the second-largest silk producer, with Karnataka accounting for over 70% of mulberry silk. Varanasi’s Banarasi silk sarees are globally renowned and have GI (Geographical Indication) status.
Jute: India produces approximately. 75% of the world’s jute, in West Bengal, which is the hub. The Gunny bag industry for food grain storage is a major user of jute, making it strategically important for food security.
Handicrafts & Handlooms: India’s handloom exports reached US $4.8 billion in 2023, with clusters like Bhagalpur (silk), Jaipur (block printing), and Kashmir (pashmina) being internationally recognized.
Wool: India ranks among the top 10 wool producers, with Rajasthan leading in carpet-grade wool. The Bhadohi-Mirzapur belt in Uttar Pradesh is world-famous for its handmade woollen carpets.

3. Exports (Performance & Trends):

Falling Apparel Exports: Apparel exports fell from US$15.5 billion in FY20 to US$14.5 billion in FY24. Buyers shifted to Bangladesh and Vietnam, which enjoy zero-duty access to EU markets, unlike India, which faces import tariffs of 9–12%.
Export Composition: Apparel accounts for approximately. 42% of textile exports, followed by cotton textiles (approx. 33%), man-made fibres ( approx. 13%), and technical textiles. For example, home textile exports from Panipat (terry towels, bed linen) grew significantly during the pandemic, but slowed after 2022.
Global Competition: Bangladesh overtook India in apparel exports by focusing on low-cost labour and FTAs. Vietnam leveraged trade agreements and supply chain efficiency. India, despite a rich raw material base, lost share due to longer lead times and fragmented supply chains.

4. Why India Has an Edge?

Abundant Raw Materials: From Gujarat’s cotton to Karnataka’s silk and West Bengal’s jute, India enjoys self-reliance in fibres. Unlike countries that rely on imports, India’s integrated fibre base is a natural advantage.
Large Workforce: The Tirupur knitwear cluster alone employs over 600,000 workers, producing T-shirts for brands like Nike, Puma, and H&M. Labour-intensive garmenting remains a comparative advantage.
Diverse Product Mix: India can simultaneously export luxury Banarasi sarees and industrial geotextiles. This ability to cater to both traditional and high-tech textile markets is unique.

5. Key Challenges:

1. Declining Growth: Textiles contracted by -1.8% (FY20–FY24), while apparel shrank by -8.2% annually. India’s share in the global apparel trade fell from 4% to 3%.
2. Lack of FTAs: Vietnam’s FTA with the EU slashed duties to 0%, while Indian exporters pay up to 12%. For example, a shirt exported from Tirupur costs 9–10% more than one from Dhaka in European markets.
3. Fragmented Supply Chain: Unlike China’s integrated clusters, India’s units are scattered — spinning in Coimbatore, weaving in Surat, dyeing in Ludhiana, garmenting in Bengaluru. This increases lead time and logistics costs.
4. Infrastructure Gaps: Many powerloom clusters lack common effluent treatment plants. For instance, dyeing units in Tirupur have often faced shutdowns due to non-compliance with pollution norms.
5. Sustainability Pressures: Global buyers like H&M and Zara demand traceability and eco-certifications. The leather tanning industry in Kanpur and textile dyeing units in Ludhiana have faced bans for pollution violations.
6. Raw Material Volatility: Cotton prices fluctuated from ₹5,500 per quintal in 2021 to over ₹9,000 in 2022, squeezing margins for spinning mills.

6. Policy Support:

PM MITRA Parks: Designed to provide plug-and-play facilities. Dhar’s MITRA Park aims to reduce logistics costs by 8–10% by housing spinning, weaving, processing, and garmenting under one roof.
PLI Scheme: ₹10,683 crore earmarked for MMF and technical textiles, attracting companies like Reliance and Welspun.
Duty Relief: Cotton import duty (11%) removed in 2025 to make Indian garments globally competitive.
Branding: The launch of Kasturi Cotton ensures quality and traceability, much like Egyptian and Pima cotton.

Way Forward:

1. Level the Playing Field in Subsidies:
  • The weaving sector currently gets a 10% subsidy up to ₹20 crore under TUFS, while garmenting and technical textiles get a 15% subsidy up to ₹30 crore. Experts argue that increasing subsidies for weaving would encourage more integrated and modern weaving mills. This is critical since over 60% of India’s weaving capacity is still in small, fragmented powerloom units, which limits efficiency and quality.
2. Develop State-Led Textile Parks with Reliable Infrastructure:
  • New parks like the PM MITRA Park in Dhar (Madhya Pradesh) are expected to reduce logistics costs by 8–10% by clustering spinning, weaving, processing, and garmenting in one location. Experts stress that similar state-led parks with assured 24x7 power, long-term land leases, and Zero Liquid Discharge (ZLD) facilities are needed across major clusters like Surat, Tirupur, Panipat, and Bhilwara to make Indian textiles globally competitive.
3. Reform Tax and Duty Structures:
  • Import duty on raw cotton (currently 11%) has raised costs for Indian spinners and exporters, while Bangladesh and Vietnam import duty-free cotton. Removing or reducing this duty could lower costs by ₹5,000–7,000 per bale.
  • Inverted duty on MMF means inputs are taxed at 18% GST, while finished fabrics attract 5% GST. This discourages investment in synthetics, even though MMF accounts for 70% of global textile consumption, but only 30% in India. Correcting this could unlock India’s MMF export potential.
  • MSMEs and job-work units face heavy GST compliance burdens. Simplified GST and lower slabs for small units can ease their cost pressures.
4. Diversify the Export Portfolio:
  • India exports around US $34.4 billion worth of textiles and apparel, but over half of this comes from only a approximately. 134 product categories (out of 840). This narrow base makes exports vulnerable. For example, if cotton apparel faces a demand slowdown, India’s exports fall disproportionately. Experts recommend moving into technical textiles (currently US $22 billion market in India, projected to grow at 15% annually), MMF apparel, and value-added home textiles like branded bed linen and terry towels.
5. Boost Domestic Capacity and Scaling:
  • India lacks large integrated mills for synthetics. For instance, China produces 70% of the world’s polyester, while India still imports high-grade MMF fabrics from Taiwan and Korea. Encouraging large-scale integrated mills in India would reduce reliance on imports and improve lead times. Also, quality failure rates in Indian apparel exports are as high as 10–12%, compared to 2–3% in Vietnam. Upgrading technology in weaving, dyeing, and processing will cut defects and increase buyer confidence.
6. Make Sustainability and Compliance Non-Negotiable:
  • Global buyers like Zara and H&M now demand sustainability certifications. Non-compliance has already hurt exporters — e.g., dyeing units in Tirupur were once shut down by the High Court for river pollution. Experts recommend mandating Zero Liquid Discharge (ZLD) plants, wastewater recycling, and renewable energy adoption. India generates 7800 million litres/day of textile effluent, and treating this is critical for both domestic compliance and global market acceptance.
7. Expand the Reach of Incentives:
  • The PLI scheme (₹10,683 crore) is expected to bring in ₹19,000 crore investments and create 7.5 lakh jobs, but most benefits are cornered by large corporates. Experts suggest expanding PLI to MSMEs in clusters like Tirupur and Surat. On the raw material side, strengthening the Cotton Mission with better seeds, drip irrigation, and farmer training could increase yields from the current 500 kg/hectare to 800 kg/hectare, matching global averages and lowering raw material costs.
8. Strengthen Trade Diplomacy:
  • India’s apparel exports to the EU face 9–12% duty, while Bangladesh (under LDC status) and Vietnam (via EU FTA) export duty-free. This gives them a cost advantage of nearly 10% per garment. For example, a cotton shirt from Tirupur may cost €10 in Europe versus €9 from Dhaka. Accelerating FTAs with the EU, UK, and US is therefore essential to regain lost competitiveness. The proposed India–EU FTA could alone boost textile exports by US $10–12 billion annually.


Conclusion
  • India’s textile industry is standing at a rare inflection point. On one side lies a legacy of centuries-old craftsmanship — from Kanchipuram silk to Bhagalpur tussar — and on the other, the promise of high-tech fabrics powering cars, hospitals, and even space missions. The question is no longer whether India can produce textiles, but whether it can scale, innovate, and sustain them at par with global leaders.
  • If the next decade is about speed, sustainability, and smart trade, then textiles could be the sector where India quietly scripts its next economic success story. The opportunity is massive: a US $350 billion domestic market and US $100 billion export target by 2030. Achieving this won’t just be about clothes or fabrics — it will mean millions of jobs, stronger rural incomes, greener production systems, and India regaining its pride as the loom of the world.

In essence: The world is watching what India will weave next — heritage or hesitation, progress or pause. The threads are in our hands.