India’s textile sector, spanning the entire value chain from farm to factory (yarn), fabric, fashion, and foreign markets (5Fs) is a critical pillar of the national economy. It contributes 2.3% to GDP, employs over 45 million workforce especially women and rural households, and generates 12% of export revenues. Yet, India struggles to compete globally with countries like China, Vietnam, and Bangladesh due to inefficiencies, outdated technologies, fragmented supply chains, and policy bottlenecks. This report comprehensively analyses India’s textile value chain, identifying structural bottlenecks and proposing strategic interventions to enhance global competitiveness and achieve the ambitious goal of USD 100 billion in textile exports by 2030.
At the farm level, the introduction of Bt cotton in 2002 significantly boosted productivity and exports. Cotton output grew by 193% between 2002-03 and 2013-14, and productivity rose by 87%. However, gains have plateaued since 2014 due to pest resistance, regulatory delays, and the non-adoption of next-generation technologies such as Herbicide Tolerant (HT) Bt cotton. As of 2023-24, India’s cotton productivity lags at 435 kg/ha far below countries like Brazil (1,839 kg/ha), Australia (2,010 kg/ha) and China (1,945 kg/ha). Cotton production is projected to fall to a 15-year low in 2024-25, and India is likely to become a net importer an alarming trend for a major textile economy.
In the yarn manufacturing stage, India’s spinning capacity suffers from outdated machinery and underutilisation. MSMEs dominate the sector, but lack access to capital and technology. India’s reliance on China for yarn exports has diminished, and high input costs especially in man-made fibres (MMFs) reduce competitiveness. Policy distortions like the Quality Control Order (QCO) on polyester raise raw material costs by 10–15% compared to competitors. The fabric production and processing segment, which is crucial for value addition, is highly decentralised and dominated by small powerloom units. This limits standardisation, scalability, and quality upgradation. Despite multiple schemes like ATUFS and PM MITRA, progress has been slow. Preferential tariffs under trade agreements have also disadvantaged India e.g., Vietnam imports Chinese fabric at lower duties due to RCEP, while Indian exports face higher tariffs.
At the fashion and apparel level, India’s apparel exports remain stagnant at under 3% global market share. Key challenges include a fragmented supply chain, stringent regulations, and low integration with global brands. India’s share in MMF apparel remains low due to high input costs and inverted GST structure. Meanwhile, countries like Bangladesh and Vietnam benefit from duty-free access in the EU and integrated production setups.
To reverse this trend, the report calls for fast-tracking vertical integration of the T&A value chain, especially of select PM MITRA parks in Gujarat and Tamil Nadu, with close coordination with state authorities. With the evolving global supply chains, India has a narrow but powerful window to unlock its full potential in T&A sector if policy, practices and products align swiftly.
