On behalf of Pawan Gupta, CEO & Co-founder – Fashinza
India has the numbers, the scale, and the workforce to support the world’s apparel demand. With a market expected to grow at 10% annually and touch $350 billion by 2030 (according to IBEF), the country’s textiles and apparel sector is already being closely tracked by global fashion houses looking to diversify beyond their traditional hubs.
India’s strength also lies in its wide fibre base, skilled labour, and full value chain integration. From cotton farming to spinning, weaving, dyeing, and garmenting, India offers it all under one roof. This shortens lead times and improves supply chain control for brands used to managing multiple geographies for one product line.
Yet, the global apparel market is highly competitive, and decisions on where to invest or source from are based on very specific criteria such as tariff structures, cost stability, and policy clarity.
FDI in Apparel
Despite these advantages, foreign direct investment into the sector has remained modest. Between April 2000 and September 2024, total FDI into textiles stood at $4.56 billion (DPIIT). That figure may sound decent on paper, but it does not reflect the real capacity the country has to absorb global capital.
Investors look for operating certainty. Input duties on fabrics or accessories, and machinery import costs, impact the overall cost structure. For many fashion labels, especially those in the mid- to high-end segment, even a 2–3% swing in cost per piece affects sourcing decisions. Countries that offer zero or low-duty imports for inputs tend to attract higher investments.
India’s tax and duty policies need more coherence. Garment categories fall under different GST slabs, and refund cycles on export credits can take longer than acceptable industry timelines. All of this affects working capital and planning cycles.
Incentive Allocation
The increased budget allocation for the textiles ministry from ₹4,417 crore to ₹5,272 crore ($611 million) is a step in the right direction. The PLI scheme, with ₹1,148 crore earmarked for FY 2025–26, aims to push large-scale production, while the ATUFS has ₹635 crore focused on technology upgrades.
But execution is what matters. Schemes often get bogged down in compliance procedures, paperwork, and a lack of clear timelines. A global brand considering India as a manufacturing base will not wait years for subsidy disbursements or approvals.
These programs need to be backed by strong institutional delivery. Brands that operate in tightly scheduled retail calendars cannot afford uncertainty.
Home Textiles and Specialised Products Show Momentum
One area that has picked up is home textiles. India’s exports in this space are growing, with the segment forecasted to expand at 8.9% annually to reach $23.32 billion by 2032 (as per Research and Markets). This is where Indian producers have built strong design, quality, and compliance systems.
Sustainable and organic textiles are also gaining traction. Buyers in the US and EU increasingly demand certified products with traceable raw materials. Many Indian exporters already meet these standards, making them viable partners for long-term sourcing.
There is a need for large scale capacity addition in mass products like denim, bottoms etc where Bangladesh holds advantage of both scale and cost. An average denim producing factory in Bangladesh is 10-20 times larger than India’s average denim unit. To achieve a $100bn export, these categories would be critical.
India can deliver, but it needs to scale this capacity especially in labour supplying states like Bihar, Jharkhand, Orissa etc.
Trade Agreements Can Strengthen India’s Appeal
The trade agreements with the UK, EU, and Canada could give India a clear cost advantage in those markets. If duties are lowered or removed, apparel from India becomes more competitive almost immediately.
But tariff policies must complement these agreements. High input tariffs can eat into the benefits of reduced export duties. Rationalisation of import duties on specialised fabrics, dyes, or accessories could be a strong enabler for setting up export-linked manufacturing bases.
It does not stop at drawing investment, rather, it is about helping that investment succeed.
Production Ecosystem Needs Deep Support
India’s production clusters in states like Tamil Nadu, Gujarat, and Telangana have shown good results. But infrastructure still lags behind other countries competing for the same investment. Power outages, inconsistent water supply, and limited last-mile connectivity can create cost overruns and delays.
Textile-specific parks and industrial zones, if implemented well, could address some of these gaps. The concept works only when backed by functioning common infrastructure and policy support for logistics, warehousing, and utilities.
Long-term capital will only flow into an environment where operational costs and compliance burdens are predictable and manageable.
India Needs a Ground-Level Strategy
India’s ambition to be a global apparel hub is realistic, but it cannot rest on scale and labour availability alone. Tariff reforms, trade facilitation, and production-linked support need to work in sync. Otherwise, India risks losing out to countries offering easier business environments, even with smaller ecosystems.
The numbers around market potential and export targets look promising, but what brands and investors look at are on-ground conditions. A simplified and stable tariff policy will send the right signal to global fashion giants and the entire value chain that supports them.