Boosting Textile Competitiveness

• 01 Nov 2025

For Prelims: Textile Sector, MSME, Make in India, Skill India, Free Trade Agreements (FTAs), Production Linked Incentive (PLI) Scheme for Textiles, PM MITRA (Mega Integrated Textile Region and Apparel) Parks, Amended Technology Upgradation Fund Scheme (ATUFS), Samarth (Scheme for Capacity Building in Textile Sector), National Technical Textiles Mission (NTTM), Circular Economy.

For Mains: Status, global competitiveness challenges, and strategic reforms needed for India's textile industry to achieve its USD 100 billion export potential and align with national economic goals.

Source: ET

Why in News?

The Government is formulating a comprehensive cost roadmap for the textile sector to align it with global benchmarks amid rising competition from Bangladesh, Vietnam, and China. 

What is the Status of India’s Textile Industry?

• Economic Contribution: It serves as a key pillar of India’s manufacturing and export economy, contributing 2.3% to the GDP, 13% to industrial production, and 12% to total exports.
• Export Performance: India exported USD 34.4 billion worth of textiles in 2023–24. Apparel forms the largest share (42%), followed by raw/semi-finished materials (34%) and non-apparel finished goods (30%).
• Employment Generation: It is the 2nd-largest employment generator after agriculture. It provides direct employment to over 45 million people, including a large number of women and rural workers.
• Global Standing: India ranks 5th globally (2024) in the textile market. The domestic market size is expected to rise from USD 174 billion to USD 350 billion by 2030.
• Production Capacity: Produces about 22,000 million garments annually, indicating large-scale production capabilities and export potential.
  • Around 80% of production capacity lies within MSME clusters, showcasing its inclusive and decentralized nature.

What Factors are Hindering the Global Competitiveness of India's Textile Industry?

• High Input Costs: Quality Control Orders (QCOs) restricting polyester and viscose imports have made domestic yarn producers depend on costlier local polyester fibre, which is 33–36% more expensive than in China.
• Lower Labour Productivity: Competitors like Bangladesh and Vietnam boast 20–40% higher labour productivity, making their manufacturing more efficient.
• Regulatory and Trade Hurdles: Stringent labour laws and the absence of key Free Trade Agreements (FTAs), particularly with the European Union (EU), deny India the duty-free access that its competitors enjoy.
• Competitive Advantages of Rivals: Bangladesh benefits from lower wages and preferential trade terms. Vietnam has superior FTAs, including duty-free access to China, and more flexible labour regulations.
• Technological Gaps: MSMEs, forming 80% of the industry, face limited capital for modernization, as outdated machinery and lack of affordable funding hinder productivity and quality.
  • MSME Dwarfism keeps the textile industry trapped in low-productivity cycles, reducing its ability to compete globally, generate employment, and scale innovation.
• Workforce & Compliance: A shortage of skilled workers in modern manufacturing (e.g., Technical Textiles), design, and marketing, along with environmental laws, increases the compliance burden on small units.

What Reforms are Required to Boost the Global Competitiveness of India's Textile Industry?

Government Roadmap

• Three-Phased Roadmap: A short-term (2-year), medium-term (5-year), and long-term plan will be developed to map and benchmark costs.
• Focus on Cost Reduction: The plan will target lowering expenses in raw materials, compliance, and taxation, and reducing manufacturing wastage
• Boosting Innovation: A dedicated committee will work on:
  • Strengthening R&D in technical textiles and sustainable materials.
  • Integrating innovation into branding and design.
  • Encouraging start-ups and design houses.
• Long-Term Vision: Achieving USD 100 billion in textile exports by 2030. Establishing global innovation centres and design houses for new-age textiles.

Strategic Reforms Needed

• Enhancing Cost Competitiveness: Modernize ports, simplify documentation, and ensure affordable, reliable energy for textile units through industrial corridors or subsidies. Rationalize import duties on cotton, man-made fibres.
• Trade and Regulatory Reforms: Prioritize key FTAs like with the EU, introduce flexible labour laws for seasonal scaling, streamline PLI Scheme processes, and maintain a stable GST regime for the textile sector.
  • The 4 Labour Codes—Code on Wages (2019), Industrial Relations Code (2020), Social Security Code (2020), and Occupational Safety, Health and Working Conditions Code (2020)—should be further streamlined to meet the textile sector’s specific needs.
• Boosting Productivity and Innovation: Invest in skill development to bridge the 20–40% productivity gap, promote R&D in technical and sustainable textiles, and enable MSME credit access for Industry 4.0 upgrades like automation and AI.
  • The Economic Survey FY25 stated that textile industry costs are expected to increase in the coming years due to a global shift toward sustainable sourcing.
• Focus on Sustainability and Branding: Support sustainable sourcing through green energy, water recycling, and circular economy models. Promote innovation-driven branding and build strong “India Handloom” and “India Craft” identities for global markets.

Conclusion

A comprehensive cost roadmap—covering short, medium and long terms—can revitalize India’s textile sector by lowering input and compliance costs, boosting productivity, fostering R&D and sustainability, and securing FTAs. Coordinated reforms across infrastructure, trade, labour, finance and innovation are essential for achieving the $100 billion export and competitiveness goals by 2030.

Drishti Mains Question:

Q. "India's textile sector, despite its significant economic contribution, faces a crisis of competitiveness." Analyse the structural bottlenecks responsible for this and suggest strategic reforms needed.

Frequently Asked Questions (FAQs)

1. What is India’s global rank in the textile market?

India ranks 5th globally in the textile market. India exported USD 34.4 billion worth of textiles in 2023–24.

2. What share of India’s industrial production is from textiles?

The textile industry accounts for 13% of India’s industrial production. The textile sector contributes 2.3% to India’s GDP.

3. What is the projected size of India’s domestic textile market by 2030?

It is expected to grow to USD 350 billion by 2030.

PM MITRA Scheme: Mega Textile Parks - IN FOCUS | UPSC Current affairs | Drishti IAS English

UPSC Civil Services Examination, Previous Year Question (PYQ) 

Prelims

Q. Consider the following statements: (2020)

1. The value of Indo-Sri Lanka trade has consistently increased in the last decade. 
2. “Textile and textile articles” constitute an important item of trade between India and Bangladesh. 
3. In the last five years, Nepal has been the largest trading partner of India in South Asia. 

Which of the statements given above is/are correct? 

(a) 1 and 2 only 

(b) 2 only 

(c) 3 only 

(d) 1, 2 and 3 

Ans: (b)

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Mains

Q. Analyse the factors for highly decentralized cotton textile industry in India. (2013)