India’s textile and apparel industry is at a structural inflection point as global sourcing shifts away from China, but the country needs to strengthen manufacturing scale, man-made fibre (MMF) production and supply chain efficiency to capture the opportunity, Mehak Dhir, managing director and partner at Boston Consulting Group told ETRetail in an interview.
The global textile and apparel industry, valued at over $2 trillion, is witnessing supply chain diversification, with China losing export share over the past decade while Vietnam and Bangladesh have gained. India’s global share, however, has remained largely stagnant, despite being one of the largest textile economies, Dhir noted.
Domestic market strong, exports remain growth lever
India’s textile and apparel market is estimated at around $180 billion, with nearly 80 per cent driven by domestic consumption, while exports account for roughly $35-40 billion, making exports the biggest growth opportunity for the sector.
“The domestic demand side is largely sorted. The real question is whether India can build the supply side fast enough to capture global opportunities,” said Dhir.
Within apparel, women’s wear, kids’ wear and emerging categories such as athleisure are among the fastest-growing segments, supported by rising workforce participation, Gen Z consumption and e-commerce penetration into smaller cities, she added.
MMF gap remains a structural challenge
Dhir highlighted that one of the key structural gaps for India’s export growth is its heavy dependence on cotton, while globally nearly 65 per cent of textile trade is dominated by man-made fibres such as polyester and viscose. This limits India’s participation in a large portion of global apparel trade and makes MMF capacity expansion critical for export growth.
She also pointed to technical textiles as a high-growth segment, driven by demand from sectors such as automotive, healthcare and infrastructure, offering higher-margin opportunities compared to traditional textile categories.
AI adoption reshaping textile value chain
Technology adoption is also becoming critical for improving efficiency across the textile value chain. According to a report by Textiles Intelligence, textile and apparel companies are increasingly using artificial intelligence across design, manufacturing and distribution to improve efficiency, reduce defects, optimise logistics and minimise overproduction.
The report noted that AI is being used to link design decisions with historical sell-through data, improve process stability in manufacturing and optimise logistics planning and inventory movement. However, the report added that the biggest efficiency gains will be realised only when AI is implemented across the entire value chain rather than as isolated tools.
It also highlighted that the textile value chain remains highly fragmented, and different stakeholders often optimise their own operations rather than the entire system, which limits the full efficiency benefits of AI adoption.
Speed, efficiency and capital access key to growth
Dhir said the next phase of growth for India’s textile and apparel sector will be driven by faster design-to-shelf cycles, digital adoption, category specialisation and operational efficiency rather than just cost competitiveness.
She also emphasised that access to affordable capital for MSME manufacturers, who form the backbone of India’s textile manufacturing ecosystem — will be critical for machinery upgrades, capacity expansion and technology adoption.
With potential free trade agreements with the UK and EU expected to improve India’s export competitiveness, the coming years could be crucial for India’s textile sector to increase its global trade share, provided supply-side constraints and technology adoption gaps are addressed.
