Context:

• India, once the world's leading textile producer and exporter, currently accounts for only about 3% of the global apparel export market, despite possessing a fully integrated textile value chain.
• India's aspiration of achieving $100 billion in textile and apparel (T&A) exports by 2030 requires not just incentives but a robust institutional ecosystem that strengthens scale, productivity, finance, labour, logistics and trade facilitation.

India’s Historical Textile Legacy:

• India has been a global textile powerhouse since the Indus Valley Civilization (IVC), with archaeological evidence of spinning, weaving and dyeing dating back nearly 4,500 years.
• Key historical milestones:
  • Indian cotton fabrics were traded across Asia and Europe.
  • Dhaka muslin, Murshidabad silk, and fine cotton textiles became globally renowned.
  • Around 1700, India contributed nearly one-fourth of global economic output, largely driven by textiles.
  • The Industrial Revolution in Britain shifted competitiveness from artisanal craftsmanship to mechanised production, resulting in India's decline in textile exports. 

Current Status - Strong Capabilities, Weak Global Presence:

• India possesses an integrated textile value chain, covering cotton production, spinning, weaving, processing, garment manufacturing, and exports. However, its share in global apparel exports remains stagnant.
• For example, China’s global apparel market share in 2024 was 29.4%, Bangladesh (9.2%), Vietnam (6.4%), and India (3.0%).
• Although the global apparel market exceeds USD 520 billion, India's participation remains disproportionately low.

Why the Apparel Sector Matters?

• This highlights apparel manufacturing as a strategic sector because of its high employment intensity.
• Employment generation for every ₹1 crore invested in the apparel sector creates 153 jobs, automobiles create 27 jobs, and steel creates 14 jobs.
• Thus, apparel manufacturing is particularly valuable for labour-intensive industrialisation, women's employment, rural-to-urban workforce transition, and inclusive economic growth.

Lessons from Successful Exporters:

• China: Developed vertically integrated textile clusters, provided concessional finance, ensured policy stability, and created globally competitive manufacturing ecosystems.
• Bangladesh: Benefited from Least Developed Country (LDC) trade preferences, supported exporters through RMG (readymade garment)-specific finance, and developed export processing zones.
• Vietnam: Leveraged foreign investment. Established industrial parks. Signed multiple Free Trade Agreements (FTAs). Built strong industry-academia linkages.
• Common lesson: Every successful exporter created institutions that enabled firms to compete at scale.

Major Challenges Before India:

• Undervalued currency advantage elsewhere: Countries like China enjoy an implicit export advantage due to relatively undervalued currencies, making their exports more competitive.
• Missing "middle" in manufacturing: India lacks mid-sized export-oriented firms capable of handling large export orders, delivering quickly, and achieving economies of scale. This remains a major structural weakness.
• Fibre mix imbalance:
  • Global apparel demand increasingly favours man-made fibres (MMF). For example, global consumption (Cotton: Non-cotton) is 25: 75, while India’s is 60: 40.
  • This limits India's participation in rapidly expanding segments such as activewear, technical textiles, and athleisure.
  • Although customs duties on MMF have been rationalised, complementary investments in spinning and weaving remain inadequate.
• High cost of capital: Real interest rates -India (6.2–8.2%), China (~1.3%), Vietnam (~1%), and Bangladesh (negative real interest rates). Higher financing costs reduce export competitiveness.
• GST refund delays: Delays in GST refunds, and export incentive disbursals create liquidity constraints for exporters.
• Labour challenges:
  • The apparel industry depends heavily on migrant labour from states such as Bihar, Odisha, and Jharkhand.
  • Key concerns include seasonal migration, high worker attrition; festival absenteeism; and labour shortages in manufacturing clusters like Bengaluru, Tiruppur and Surat.
  • There is the need to expand production into regions with abundant labour, such as Bihar, following examples like Pearl Global's Muzaffarpur unit.
• Low female labour force participation: Greater female workforce participation could reduce labour shortages, support labour-intensive manufacturing, and enhance inclusive growth.
• Trade competitiveness:
  • The recently concluded India–UK Comprehensive Economic and Trade Agreement (CETA) and the EU–India FTA negotiations improve market access. However, tariff reductions alone are insufficient.
  • India must also improve end-to-end logistics, customs efficiency, documentation, digital approvals, supply chain predictability, and compliance processes. 

Way Forward - Build Institutions, Not Just Incentives:

• India needs a whole-of-ecosystem approach rather than isolated policy interventions.
• Priority reforms:
  • Strengthen PM MITRA (Mega Integrated Textile Region and Apparel) Parks.
  • Develop globally competitive textile clusters.
  • Expand manufacturing scale.
  • Improve logistics and port connectivity.
  • Lower financing costs.
  • Accelerate GST refunds.
  • Promote MMF and technical textiles.
  • Encourage investment in spinning, weaving and processing.
  • Improve labour skilling and mobility.
  • Increase female labour force participation.
  • Create digitally enabled and predictable trade facilitation systems.
  • Integrate finance, infrastructure, institutions, skills and market access into a unified industrial strategy.

Conclusion:

• India possesses the historical legacy, raw material base and integrated value chain required to become a global textile leader once again. Yet history alone cannot secure future competitiveness.
• With structural reforms implemented with urgency, India can reposition itself as a leading global apparel sourcing hub and significantly expand its share in global value chains.