India's Textile Industry: Poised for Growth Amid Global Sourcing Shift

India's textile industry is set to benefit from global sourcing shifts toward 'China+1', presenting new export opportunities. However, challenges in man-made fibres remain. Home textiles are a promising niche. Free Trade Agreements could further enhance export potential, giving India preferential access to significant markets.

India’s textile sector is on the cusp of a significant growth trajectory, fueled by the global 'China+1' sourcing strategy, which is creating ample opportunities for exports. In a report, Jefferies highlights India's potential gains but points out the structural gap in the country’s transition to man-made fibres (MMF).

The current global textile and apparel market is valued at over USD 900 billion, with apparel constituting around 60% of the trade. As global brands diversify their sourcing strategies away from China, India is strategically poised to capture a larger market share, thanks to its comprehensive fibre-to-fashion ecosystem, export capabilities amounting to around USD 37 billion, abundant raw materials, skilled workforce, and supportive government policies.

Despite the promising outlook, Jefferies notes that India’s export portfolio remains heavily skewed towards cotton-based products, even as global demand leans increasingly towards MMF apparel and technical textiles. Within this broader textile opportunity, home textiles emerge as an attractive segment, comprising about 7-10% of global trade, supported by housing growth and consumer interest in home aesthetics.

India holds a commanding 45-60% market share in key US home textile categories but lags behind in the UK and EU markets, with shares from 5% to 25%. Upcoming Free Trade Agreements (FTAs) could boost India’s textile exports by easing tariff barriers. The UK FTA, effective July 2026, and a prospective India-European Union FTA from 2027, could provide India preferential access to a USD 220 billion textile import market, where nations like Bangladesh have previously enjoyed tariff advantages.

The convergence of 'China+1' strategies, along with supplier consolidation and Bangladesh's gradual loss of LDC-linked benefits, potentially offers Indian exporters substantial market share gains. The US, EU, and UK together form a lucrative market for global exporters, with apparel imports exceeding USD 300 billion.

In contrast, India’s current share in EU and UK apparel imports is minimal, despite the country’s robust cotton value chain and manufacturing skills. Moreover, areas like man-made fibres, sportswear, and athleisure, where global demand is growing, remain underrepresented by India. Historically, India has lagged behind competitors like Bangladesh and Vietnam due to limited FTA coverage, higher logistics and compliance costs, smaller garmenting capacities, and a cotton-focused product mix.