India’s textile and apparel export sector is expected to benefit from shifting global sourcing patterns, improving demand conditions and recently concluded trade agreements, according to a report by Motilal Oswal.
Growing optimism among global apparel retailers and brands as inventories stabilise, sell-through rates improve and discretionary consumer spending gradually recovers across key markets in the United States and Europe was highlighted. These trends are expected to enhance sourcing visibility and create healthier ordering cycles for manufacturers.
The improving demand environment is likely to support stronger order inflows for Indian textile exporters, leading to better capacity utilisation and improved margin visibility across the sector.
A major catalyst for future growth is the recently concluded India-UK Free Trade Agreement (FTA), which is expected to strengthen the competitiveness of Indian textile and apparel exports in the British market. The UK imports nearly US $20 billion worth of apparel annually, yet India currently accounts for only around 6% of the market. According to the report, India’s relatively small share is largely due to an import duty disadvantage of 8%-12% compared with countries such as Bangladesh, Turkey and Cambodia, which enjoy duty-free access.
The report noted that the proposed FTA is expected to eliminate import duties on Indian apparel exports, significantly improving India’s competitive position and placing it on par with major sourcing nations.
Motilal Oswal also pointed to the continued decline in China’s dominance of global apparel exports as a significant opportunity for India. China’s share of global apparel exports fell from 37% in calendar year 2014 to 29% in calendar year 2024, creating room for alternative sourcing destinations to expand their presence in international markets.
India is well placed to capture a larger share of global apparel trade through a combination of recent trade agreements, government support measures such as the Production Linked Incentive (PLI) Scheme for Textiles, and ongoing investments in manufacturing capacity.
The ongoing China+1 sourcing strategy adopted by global brands, coupled with rising labour costs in China, could further strengthen India’s position in international supply chains. It noted that Indian exporters could gain a larger share of the UK market over the medium term as brands diversify their sourcing networks, drawing parallels with the strong export growth experienced by Vietnam following its trade agreements.
Beyond the UK market, the continued decline in China’s apparel exports to the United States also presents a significant opportunity for Indian manufacturers. China’s share of US apparel imports declined to 22% in 2023 from 37% in 2019, reflecting an ongoing diversification of sourcing by global buyers.
While Bangladesh and Vietnam have traditionally benefited from lower production costs and favourable trade arrangements, India is increasingly emerging as a competitive alternative due to new trade agreements, substantial manufacturing capacity, improving infrastructure and government-backed initiatives, including the PLI Scheme and the development of mega textile parks.
