Indian Textile Export Shows Resilience in FY 2025–26 Despite Global Pressures

India’s textile and garment sector demonstrated notable resilience in FY 2025–26, registering a 2.1% growth in Indian textile export, reaching ₹3,16,334.9 crore. This performance comes as a positive surprise, countering earlier projections that anticipated a contraction amid global economic uncertainties.

According to official data from the Ministry of Textiles, exports rose from ₹3,09,859.3 crore in FY 2024–25, reflecting sustained international demand. However, beneath this modest growth lies a more complex reality—one that highlights structural challenges and increasing global competition.

Value-Added Segments Drive Indian Textile Export Growth

A key highlight of this year’s performance is the strong contribution from value-added segments, which continue to anchor the growth of Indian textile export.

• Ready-Made Garments (RMG), the largest export category, grew by 2.9%, reaching ₹1,39,349.6 crore.

• Man-made textiles posted a 3.6% increase, reflecting a gradual shift in global demand toward synthetic and blended fabrics.

• Handicrafts emerged as the fastest-growing segment, rising 6.1% to ₹15,855.1 crore, driven by niche global demand for artisanal and sustainable products.

• Meanwhile, traditional segments such as cotton yarn and fabrics saw marginal growth of 0.4%, indicating stagnation in legacy product lines.

India also expanded its export footprint to over 120 countries, with notable gains in markets like the UAE, UK, and Germany—signaling diversification beyond traditional destinations.

Competitive Pressures in the Global Textile Market

Despite the positive growth, India’s performance lags behind key competitors such as Vietnam and Bangladesh, both of which have achieved stronger export expansion.

A significant factor impacting Indian textile export competitiveness is tariff disadvantage. Indian products face high import duties in major markets, particularly the United States, where tariffs on certain categories can reach up to 50%. In contrast, competing nations benefit from preferential trade agreements, allowing them near duty-free access.

Additionally, global cost pressures have intensified:

• Rising raw material prices

• Increased energy costs

• Higher logistics expenses

• Escalating labour wages

These factors have compressed margins and reduced pricing flexibility for Indian exporters.

Concerns Over Export Value and Pricing Power

While export figures show growth in rupee terms, concerns remain about the real value of Indian textile export earnings.

Currency depreciation can make exports more competitive, but when coupled with inflation, it may not translate into higher real dollar earnings. In some cases, exporters may be shipping higher volumes but earning less in value terms—indicating a potential erosion of pricing power.

There are also indications of segment-specific slowdowns, suggesting that the headline growth figure may not fully capture underlying vulnerabilities in the sector.

Structural Challenges Limiting Growth

India’s textile industry continues to face several structural constraints that limit its global competitiveness:

• A fragmented manufacturing base, reducing economies of scale

• Inverted duty structures on raw materials in some segments

• Limited access to preferential trade agreements

• Lower integration across the value chain compared to competitors

Countries like Vietnam and Bangladesh have leveraged streamlined manufacturing ecosystems and favorable trade agreements to strengthen their export positions—areas where India still lags.

Policy Support and Future Outlook for Indian Textile Export

Looking ahead, the long-term outlook for Indian textile export remains optimistic. The sector is expected to expand significantly, with projections estimating a market size of $190 billion by FY26, growing further to $350 billion by 2030.

Government initiatives are expected to play a crucial role in this growth trajectory:

• The Production-Linked Incentive (PLI) scheme is encouraging investment in high-value segments such as man-made fibers and technical textiles.

• Development of integrated textile parks aims to improve infrastructure and reduce logistics costs.

• Ongoing negotiations for Free Trade Agreements (FTAs) with key markets like the UK and EU could significantly enhance market access and reduce tariff barriers.

The Road Ahead

The future of Indian textile export will depend on the industry’s ability to move beyond volume-driven growth toward value-driven expansion. Strengthening competitiveness, improving product diversification, and securing better trade access will be critical.

While FY 2025–26 reflects resilience, sustaining long-term growth will require addressing structural inefficiencies and capitalizing on policy support to enhance India’s position in the global textile value chain.