India has a significant opportunity to strengthen its position in global textile and apparel exports as international brands diversify sourcing under the China+1 strategy. However, converting this opportunity into sustained export growth and higher global market share will depend on manufacturing competitiveness, productivity and execution rather than trade agreements alone, according to a research report by 360 One Capital.
The report said global brands are increasingly looking to reduce their dependence on China by diversifying supply chains amid geopolitical uncertainties and the need for greater resilience. While India’s expanding network of free trade agreements offers a favourable platform, the brokerage cautioned that policy support alone will not be enough to secure long-term gains.
“The central question is no longer whether the opportunity exists. It is whether Indian manufacturers can build sufficient scale, productivity, technical capability, compliance and delivery reliability to capture the incremental sourcing volumes becoming available,” the report noted.
According to 360 One Capital, companies with scalable garmenting operations, integrated manufacturing, strong customer relationships and disciplined execution are best positioned to benefit from the global sourcing shift.
The report highlighted that India’s share of global apparel exports has remained at around 3 per cent, while Bangladesh has increased its share to approximately 9-10 per cent and Vietnam to around 6-7 per cent over the past two decades.
It noted that India’s competitive challenge has evolved beyond labour costs. Global buyers are increasingly evaluating suppliers based on manufacturing scale, product capabilities, lead times, logistics efficiency, regulatory compliance, sustainability standards and overall supply-chain resilience.
Garment manufacturing remains India’s biggest structural gap, with fragmented and sub-scale production limiting its ability to service large global sourcing programmes. Future competitiveness, the report said, will increasingly depend on higher output per worker, factory efficiency, automation and delivery reliability rather than wage advantages alone.
The report also stressed the need for India to diversify beyond cotton-based products as global demand shifts towards man-made fibres (MMF), performance apparel and technical textiles. Developing advanced fibre and yarn capabilities, alongside improving cotton productivity, fibre quality and traceability, will be essential for future growth.
While trade agreements such as the recently implemented India-UK Free Trade Agreement (FTA) are expected to improve India’s sourcing competitiveness, the report emphasised that operational preparedness will determine whether tariff benefits translate into sustained export orders.
“The industry therefore needs multiple trade agreements alongside meaningful expansion in garmenting capacity, technical capabilities, compliance and new labour-rich manufacturing clusters,” the report stated.
Looking ahead, 360 One Capital expects automation, sustainability and supply-chain traceability to emerge as critical competitive differentiators. It concluded that India’s textile and apparel sector has substantial long-term growth potential, but the greatest gains will accrue to companies that successfully combine scale, integration, productivity, product innovation and disciplined capital allocation, rather than relying solely on favourable trade policies or lower labour costs.
