India’s textile and apparel industry could be on the cusp of its biggest export opportunity in decades as global sourcing continues to diversify away from China, supported by improving trade access, tariff parity and government policy initiatives, according to a report by Nuvama Institutional Equities.
The brokerage said the global textile industry, valued at nearly USD 1.6 trillion, is a mature market growing at just 2.5–3.5% annually. Rather than relying on higher global demand, India’s growth potential lies in capturing manufacturing and sourcing volumes that are steadily shifting away from China.
China’s share of US apparel imports has declined by almost half over the past decade, creating an estimated 20% market opportunity for alternative sourcing destinations, including India, Bangladesh, Vietnam, Pakistan and Indonesia.
According to Nuvama, India is now competing on a more level playing field, as most major textile-producing countries—except China—face broadly similar tariff structures. India’s trade competitiveness is also expected to improve further with the implementation of the India-UK Comprehensive Economic and Trade Agreement (CETA) and the ongoing negotiations for an India-European Union Free Trade Agreement (FTA).
The brokerage noted that India’s share of the European Union’s apparel imports has remained stagnant at around 3% over the past decade, significantly behind Bangladesh’s 16.7% share, highlighting substantial growth potential if market access improves.
A recovery in US retail demand is also expected to support textile exports. US retail sales increased from USD 5.3 trillion in FY2019 to USD 7.2 trillion in FY2024, while inventory levels have normalised after years of correction, paving the way for increased ordering activity.
Despite the positive outlook, Nuvama pointed out that India continues to face structural challenges. Although the country is one of the world’s largest cotton producers and spinning hubs, it remains heavily dependent on cotton at a time when global textile consumption is increasingly shifting towards man-made fibres (MMF). Higher labour costs, limited trade advantages and fragmented manufacturing have also constrained India’s competitiveness in garment exports.
The report said government initiatives such as the PM MITRA parks, along with policy support for garments, MMF and technical textiles, are expected to improve industry integration, scale and value addition.
However, Nuvama cautioned that several risks remain, including potential changes in US tariff policies, delays in concluding the India-EU FTA, cotton price volatility, excess Chinese MMF capacity entering global markets through alternative routes, and execution risks associated with large-scale capacity expansion projects.
Overall, the brokerage believes the evolving global sourcing landscape presents India with a significant opportunity to strengthen its position as a leading global textile and apparel manufacturing hub.