After years of trailing its regional rivals in apparel exports, India is upping its game.
Buoyed by a series of factors—not least the geopolitics of the region and the specter of Trump’s tariffs, which have initially outlined big penalties for Vietnam and Bangladesh—India is prepping for a speedier ascent to the top of the apparel sourcing heap.
Both Vietnam and Bangladesh have been vying for the spot of the second-largest apparel exporter in the world after China, and while India has flailed in past years, there appears to be new momentum in recent months.
The question is clear in both political and manufacturing circles: Can India be the next big sourcing hub?
The numbers support some optimism: apparel exports were up 11.3 percent year-on-year in May. Industry insiders are now talking about an 18-percent growth target for this year.
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Discussions around capacity building have yet to materialize at the ground level, although many factory owners told Sourcing Journal they were running at 80 to 90 percent capacity—a welcome change from previous years when growth remained steady or declined.
The past few years have been tough for India. Total textile and apparel exports declined from $44.4 billion in fiscal year 2022 to $35.8 billion in fiscal year 2024 (ending March 31), due to weak global demand and elevated production costs. In fiscal year 2025, India’s textile and apparel exports rose by 6.3 percent to reach $36.6 billion. Apparel exports alone saw a 10-percent increase, while textile exports grew by 3.61 percent.
While Bangladesh crossed the $38.43-billion mark in its 2024 fiscal year (ending June 30, 2024), Vietnam crossed $44 billion in calendar year 2024. Bangladesh’s apparel exports totaled $36.56 billion between July 2024 and May 2025, marking a 10.2-percent increase compared to the same period the previous year.
Despite the lower baseline, India’s stakeholders believe the structural changes underway offer a path to rapid catch-up.
Things have changed substantially in recent months. Bangladesh’s political situation has been unstable since former Prime Minister Sheikh Hasina was ousted in student-led protests. The powerful Bangladesh Garment Manufacturers and Exporters Association (BGMEA) was dissolved and has only recently reassembled under new leadership on June 16. It now faces the specter of 37-percent tariffs by the Trump administration, a spat with India over border and trade issues affecting yarn and textile availability in Bangladesh, and new limits to its consumer access in India.
The elections announced for the first half of April 2026 still leave a window of doubt for global brands regarding regulatory processes that the next government may introduce, although the general feeling is that with apparel comprising 80 percent of Bangladesh’s total exports, the sector will likely remain a national priority.
Meanwhile, Vietnam, with its strong foothold in the industry, has been facing headwinds due to the prospect of a 46-percent tariff by the Trump administration—clearly aimed at curbing the China-to-Vietnam trade route. India’s 27-percent tariff appears to be a major advantage, given that scenario.
A recent report by equity brokerage house Systematix noted that India stood to benefit from evolving global trade dynamics, including U.S. tariff-driven diversification, compliance pressures from the European Union, and advantages from the free trade agreement with the United Kingdom.
“With the U.K. eliminating 8 to 10 percent apparel import duties under the newly ratified FTA, India is gaining share in both basic and value-added apparel categories,” the report noted. “Simultaneously, ongoing US-China trade tensions and elevated production costs in Vietnam and Bangladesh are prompting global brands to re-evaluate supplier bases. These factors provide a structural tailwind for Indian exporters, particularly those positioned in woven garments, home textiles, and sustainable apparel.”
“There is a general sense of optimism and a sense that India is going to benefit,” Pratik Tholiya, equity research analyst at Systematix Group, told Sourcing Journal. “Everyone is waiting to see how the U.S. tariff situation turns out, and how much this will help India be on par with the tax advantages that Bangladesh and Vietnam have had in past years.”
Yet, change on the ground remains slow. “Actions are not quite in line with the words,” he observed, noting that the industry is watching closely for the 90-day window prescribed by President Trump to close before scrambling to add capacity.
“Given that the advantage to India remains, the real benefits will only start coming in from 2026,” he said, estimating an eight- to nine-month window for capacity building, followed by a few more months for production to begin.
Chandrima Chatterjee, secretary general of the Confederation of Indian Textile Industry (CITI) shared the view that optimism was a big factor spurring the industry.
“There is a great, loud echo of the sentiment from every angle,” she told Sourcing Journal. “In the past there have been a lot of capacity utilization issues, and it is true that there have been gaps in the growth of capacity building.” She said that it was unclear how to read the sentiment as the situation continued to be in flux.
“In general, if the demand is sustained, the industry will be able to deliver. But if it is as ad hoc as it has been in the last few years, then it will need a big push, and a lot of that will also have to come from the policy side.”
The Indian government has rolled out a string of initiatives aimed at scaling up infrastructure and boosting exports. Under the Production Linked Incentive (PLI) scheme, 106.83 billion rupees ($1.3 billion) has been earmarked to support companies investing in MMF and technical textiles. Additionally, the government is developing seven mega textile parks under the PM MITRA scheme. These parks will house integrated value chains with access to power, water, testing labs, and worker housing—helping Indian manufacturers overcome one of their biggest hurdles: fragmentation.
“The apparel exports will see faster growth than textiles,” Chatterjee noted, adding that inventory turnover is higher in apparel. Policymakers have also been showcasing these initiatives, including at Bharat Tex, held in New Delhi earlier this year as a showcase for India’s capacity. “The good news is that if apparel exports grow, so will textiles,” she said.
“The UK FTA is a game changer,” she added unequivocally, pointing out that it was the first FTA with a country to which India exports a substantial volume—approximately 7 to 8 percent of its total.
One of the biggest disadvantages India faces is the absence of comprehensive free trade agreements, but these are now being seen as a beacon of hope. Negotiations for an India-European Union (EU) free trade agreement are back on, and much is riding on their success.
Industry heads said that if the deal comes through, it could ease the burden of high tariffs—currently at 9.6 percent—on apparel shipped to Europe, making Indian goods more competitive than those from neighboring countries that already benefit from tariff preferences. Both Vietnam and Bangladesh enjoy preferential trade terms under the EU’s EVFTA and EBA agreements, respectively.
Policymakers said that they were making progress. “India’s textile industry has been historically decentralized. With PM MITRA, we are aiming to consolidate and create scale that can rival Vietnam or Bangladesh,” said a senior official at the Ministry of Textiles.
Last week in London, commerce minister Piyush Goyal highlighted at the India Global Forum that the India‑UK Free Trade Agreement would provide “stability and predictability” for businesses, boost confidence to invest, and lead to a “good marriage” expected to double bilateral trade within five years. He praised the FTA for fostering resilient supply chains, complementing economies, unlocking innovation, and enabling joint ventures—while also ensuring protections like social‑security parity for temporary workers.
The mood of optimism also rests on other factors, including what Indian manufacturers have characterized over the past few months as a “perceptible shift in buying patterns.”
“Priorities have shifted,” said one manufacturer in the southern town of Tirupur, who asked not to be named. “The brands still focus on costs, but in many cases they are prioritizing reliability, sustainability, and proximity to raw materials,” he said. “Finally, the advantage that India has long had—of a vertically integrated textile value chain, from cotton farming to spinning and stitching—is being recognized.”
While listing the extent of vertical integration that helps the industry, he added quietly, but with some satisfaction: “It is also a logistical advantage that both Vietnam and Bangladesh often lack.”
