India’s textile industry, a global leader in cotton and synthetic fiber, faces challenges like high logistics costs, outdated machinery, and complex regulations. Strategic investments in energy efficiency, logistics, and trade agreements could boost growth. With innovation and sustainable practices, India could regain its global textile leadership by 2030.
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Indian textile industry, despite being a global leader in cotton and synthetic fiber production, has seen sluggish growth in recent years.
India is the second-largest cotton producer globally, accounting for 24% of global output and 45-50% of global cotton cultivation area.
India is also the second-largest producer of man-made fibers (MMF), with companies like Reliance Industries and Aditya Birla Group driving output.
According to the Index of Industrial Production (IIP), the textile industry employs 45 million people across the cotton value chain and contributes 13% to industrial production, 12% to exports, and 2% to GDP.
80% of the textile value chain resides in micro, small, and medium enterprises (MSMEs), with hubs like Tiruppur (knitwear), Surat (synthetic fabrics), and Ludhiana (woolens).
India produces a wide range of textiles, from traditional cotton fabrics to technical textiles used in healthcare, automotive, and aerospace sectors.
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The government introduced schemes such as the Scheme for Integrated Textile Parks (SITP), Technology Upgradation Fund Scheme (TUFS) and Mega Integrated Textile Region and Apparel (MITRA) Park scheme. |
Indian cotton supply chain spans multiple states, pushing up logistical costs and restricting large-scale production. Competitors like China and Vietnam benefit from vertically integrated "fiber-to-fashion" supply chains.
Indian textile costs are inflated by high energy prices, outdated machinery, and complex labor laws.
According to data from the Confederation of Indian Textile Industry (CITI), polyester fibre in India was 33-36% costlier than China, in January 2025 due to restrictions on cheaper imports.
Exporters face overbearing customs procedures, such as tracking every square centimeter of fabric and accessory used. Competitors like Vietnam enjoy simpler, liberalized processes.
Lack of Free Trade Agreements (FTAs) puts India at a disadvantage; rivals like Bangladesh and Vietnam leverage FTAs with the EU and US for tariff-free access.
Global brands demand stricter compliance with sustainability norms (e.g., renewable energy, water recycling). The EU’s 16 new sustainability laws (2021–2024) pressure Indian firms, especially MSMEs, to adopt eco-friendly practices.
India’s per capita fiber consumption (5.5 kg) lags far behind China (11.2 kg) and North America (22.5 kg), signaling untapped domestic demand.
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Comparing India with Competitors
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Invest in logistics hubs and digital platforms to reduce fragmentation. For example, Gujarat’s textile parks aim to integrate fiber-to-fabric processes.
Incentivize energy-efficient technologies and automate processes. The government’s Production Linked Incentive (PLI) scheme offers subsidies for MMF and technical textiles.
Streamline customs procedures and reduce bureaucratic hurdles. The Economic Survey 2024–25 emphasized eliminating processes that drain exporters’ resources.
Negotiate agreements with the EU, UK, and US to secure tariff advantages. India’s FTA with the UAE (2022) has already boosted exports.
Re-evaluate Quality Control Orders (QCOs) to allow cheaper imports while promoting domestic MMF production. Target global MMF demand, which accounts for 77% of fiber consumption.
Support MSMEs in adopting green technologies and recycling. India’s textile recycling market could reach $400 million by leveraging "fast fashion waste".
Encourage large-scale integrated textile firms to improve efficiency and agility. For example, companies like Welspun are investing in end-to-end production.
Target Africa, Latin America, and Southeast Asia to diversify exports beyond traditional markets.
By addressing the challenges, India can:
India’s textile industry must blend traditional strengths with innovation, sustainability, and strategic policy reforms to reclaim its global leadership.
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PRACTICE QUESTION Q.Cotton is termed ‘White Gold’ due to its economic significance. Discuss the challenges faced by cotton farmers and the role of MSP in stabilizing the sector. 250 words |
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