India's textiles horse finally has both legs free to chase global gains

After years of policy hurdles, the sector finally has a clear path to scale and compete

India’s long decline in textiles and garments was not due to bad luck or weak factories, but poor policy choices. After years of hurting its own synthetic industry, the country is finally removing the barriers that held it back. The policy reset has begun — now execution, scale and speed matter most. The turnaround can start now.

 

China shipped $113 billion of garments last year, Bangladesh $51 billion and Vietnam $39 billion —while India, despite its rich textile heritage, managed only $17 billion.

 

India’s real handicap in textiles: It missed the synthetic revolution that now drives 70 per cent of global apparel trade. Synthetics power sportswear, winterwear, athleisure, and fast fashion — the categories that dominate shelves in the United States, Europe, and East Asia. 

 

Vietnam and Bangladesh built smooth, low-cost synthetic supply chains to serve this demand. India clung to cotton — and then made synthetics even costlier through high duties, anti-dumping actions, and sweeping quality control orders (QCOs) that restricted imports and priced micro, small, and medium enterprises out of the winterwear boom. 

 

The impact is visible on the factory floor. Most Indian units run at full capacity only during the cotton-heavy spring–summer season and sit idle through autumn and winter, when synthetics drive global orders. Costs run year-round, revenues don’t.

 

By ignoring synthetics — the growth engine of modern apparel — India tied one leg of its textile horse, limiting scale, depressing wages, and losing market share in the very segment where the future lies. The good news is that this is no longer the case. 

 

Four reforms: Recent policy changes have removed four major barriers that had made India uncompetitive in synthetic garments.  

First, the government has withdrawn QCOs on over 20 synthetic inputs such as polyester and viscose fibres and yarns, restoring access to global raw materials. Input prices are already falling, giving manufacturers a real chance to compete. 

 

Second, labour reforms have raised the worker threshold under the Industrial Disputes Act from 100 to 300, while states like Tamil Nadu, Karnataka and Gujarat now allow flexible work schedules. This makes it easier for factories to hire, expand and run year-round. 

 

Third, India is closing its tariff gap through free-trade agreements. Indian garments faced duties of 8–12 per cent in the United Kingdom and European Union (EU), and up to 22 per cent in the US, while Vietnam and Bangladesh paid zero. With the India-UK free-trade agreement done and talks moving with the EU and US, tariff parity is closer despite recent US trade actions. 

 

Finally, the government has fixed goods and services tax anomalies that taxed fibres and yarn at higher rates than finished garments, improving cash flow and allowing factories to operate fully.

 

What India must do now: With the most significant distortions gone, India must now clear the second layer of frictions holding the sector back.

 

First, stop encouraging low-value exports of fibre and yarn. Current rebates make it cheaper to sell these abroad than at home, leaving Indian garment makers short of affordable inputs. India should promote finished clothing, not raw materials.

 

Second, fix the weakest link in India’s textile chain — woven fabric and processing. India exports a lot of yarn but has only 6 per cent of the global fabric market because its weaving and processing units are small, outdated and informal. India must build large, modern, integrated weaving and processing parks to turn yarn strength into fabric leadership. That is how China built its textile power. 

Third, fix export procedures. Under advance authorisation, exporters must link every imported fabric to each garment produced — an almost impossible task given the hundreds of fabrics and thousands of styles involved at a large unit. India must shift to Bangladesh-style value-based import entitlements that allow firms to import inputs up to a fixed percentage of export value.

 

Finally, simplify Customs rules to allow duty-free import of buttons, zippers, and labels on self-declaration and risk-based verification. Current system demands large data sets of information for even low value items.

 

Firm-level initiatives: India’s leading garment exporters must stop acting only as suppliers to foreign brands. They need to create their own designs and labels, and learn the fast-fashion model that moves clothes from idea to store in a matter of weeks. To earn more, they must include high-value synthetic fabrics, branded clothing and new blends that dominate global markets. Competing on quality — not just on low tariffs — is the way to move up the value chain. The immediate priority should be to upgrade factories. India has about 1,200 fast-fashion-compliant units in cotton, but far fewer in synthetics. Nearly 80 per cent of exporters still miss key efficiency benchmarks such as standard allowed minute. 

 

Japan is a reminder: Despite zero tariffs for a decade under the FTA, exports barely rose because Indian firms did not align with Japan’s exacting quality and workflow standards. Millions of new jobs and a much bigger global market share are now within reach—if garment makers act boldly.

The author is the founder of GTRI