India’s Apparel Export Industry: Structure, Challenges and Global Position

India stitches, dyes, embroiders and ships apparel worth billions of dollars to over a hundred countries every year, yet the story of how it got here, and where it is headed, is far less discussed than the finished garments themselves. From humble beginnings as a quota-protected supplier, India has grown into one of the world’s most trusted sourcing destinations for value-added, design-rich clothing. This post breaks down where India stands in the global apparel export race, who buys Indian garments, which institutions and policies support the industry, and why growth has hit some speed bumps along the way.

India’s position in global apparel exports 🔗

Apparel remains one of the largest and most consistent segments in India’s export basket. According to the Ministry of Textiles, India is currently the sixth-largest exporter of textiles and apparel in the world, holding close to a 4 per cent share of global trade in the sector. That places India firmly behind global leaders such as China, the European Union, Bangladesh and Vietnam, but still among a small group of countries that dominate the world’s clothing supply chains.

What keeps India in this league is not sheer volume but the kind of product it exports. Unlike competitors that specialise in high-volume, low-cost basics, India has built its reputation on value-added garments, intricate embroidery, hand embellishment and a wide palette of fabrics, prints and textures. This blend of craftsmanship and manufacturing scale is why global buyers continue to place India high on their sourcing lists even when cheaper alternatives exist elsewhere.

What makes Indian garments stand out 🔗

India’s strength lies in offering something machines alone cannot replicate easily: handwork. Zardozi, mirror work, block printing and hand embroidery are still widely used in export garments, giving Indian apparel a design edge that mass manufacturers in East and Southeast Asia find hard to match. This is particularly valuable for premium and fashion-forward segments, where buyers are willing to pay more for detailing rather than settle for plain, machine-only finishes.

Key export destinations for Indian apparel 🔗

Indian textile and apparel products, including handlooms and handicrafts, now reach more than a hundred countries, with growth recorded across over 120 destinations in the last financial year alone, according to Fibre2Fashion. Still, a handful of markets account for the bulk of shipments.

The United States remains India’s single largest buyer of apparel. The European Union, with the United Kingdom, Germany and France as the leading destinations within the bloc, is the other major pillar of demand. Together, the US and EU account for close to 47 per cent of India’s total textile and apparel exports, as noted by the Ministry of Textiles. Beyond these two anchor markets, India also exports significant volumes to the UAE, China, Sri Lanka, Saudi Arabia, Singapore, Bangladesh, Turkey, Vietnam, Brazil, Hong Kong, Canada and Egypt, reflecting a fairly diversified customer base rather than dependence on a single region.

The post-quota era: A turning point for Indian apparel 🔗

To understand India’s current export structure, it helps to look back at 2005. Until then, global textile and clothing trade was governed by a system of country-wise quotas under the Multi Fibre Arrangement, later replaced by the Agreement on Textiles and Clothing. This system was fully phased out by 1 January 2005, as confirmed by the World Trade Organization, ending decades of quota-restricted access to major markets like the US and EU.

The removal of quotas opened the field to genuine competition based on cost, quality and reliability rather than allotted shares. India used this liberalisation to position itself as a serious sourcing hub, and several reputed international retail houses responded by setting up sourcing or liaison offices within the country. Names like Marks and Spencer, Haggar Clothing, Kellwood, Little Label, Boules Trading Company, Castle, Alster International and Quest Apparel Inc. established a direct presence to work closely with Indian manufacturers. This period marked a shift from India being just another quota-holder to becoming a preferred long-term sourcing partner.

Apparel Export Promotion Council: The industry’s export backbone 🔗

Much of the coordination behind India’s apparel export growth is handled by the Apparel Export Promotion Council, commonly known as AEPC. Functioning under the Ministry of Textiles, Government of India, AEPC acts as the official representative body for apparel exporters and works as a single point of contact for both Indian manufacturers and the international buyers who source from them.

What AEPC does for exporters 🔗

AEPC’s role goes well beyond ceremonial representation. It gives members access to updated trade statistics, keeps them informed about international trade fairs, and helps facilitate participation in these events, including organising India’s own garment fairs that attract hundreds of exhibitors. The council also identifies emerging markets that Indian exporters can tap into, leads trade delegations abroad to open new business relationships, offers technical guidance to help manufacturers meet international quality standards, and shares market intelligence that helps exporters plan production and pricing more effectively. For smaller and first-time exporters especially, this kind of institutional support can make the difference between a one-off shipment and a sustained export relationship.

Government support and policy framework 🔗

Beyond AEPC, the Indian government backs the apparel and textiles export sector through the Foreign Trade Policy and a series of targeted schemes. Programmes such as the PM Mega Integrated Textile Regions and Apparel Parks scheme, the Production Linked Incentive scheme, the National Technical Textiles Mission and SAMARTH, a capacity-building initiative for the textile workforce, are all aimed at improving manufacturing scale, skill availability and global competitiveness, according to details shared by the Ministry of Textiles. The Rebate of State and Central Taxes and Levies scheme, which reimburses embedded taxes on garment and made-up exports, has also been extended to keep Indian products cost-competitive against rivals.

On the trade-agreement front, India has been active in recent years. Free trade agreements with the UK, the European Free Trade Association bloc, Oman and New Zealand have either come into force or been concluded, alongside the conclusion of an India-EU free trade agreement, all of which are expected to improve market access and reduce tariff disadvantages for apparel exporters, as reported by the Ministry of Textiles. The government has set an ambitious target of touching Rs 9 lakh crore in textile and apparel exports by 2030, a goal that also aligns with industry projections shared by IBEF of reaching 100 billion dollars in textile exports within the same timeframe. Indian manufacturers are being pushed to expand capacity to meet this demand from increasingly buoyant global retailers.

Why export growth has slowed 🔗

Despite the policy push, the pace of India’s apparel export growth has not matched its ambition in recent years. Industry analysis around FY2018 and FY2019 flagged this slowdown, and the underlying structural issues have persisted well beyond that period. A comparison published by WWD’s Sourcing Journal shows that even by 2025, Indian apparel exports had not climbed meaningfully above their 2020 levels, while Bangladesh and Vietnam both expanded their share of the global market considerably in the same window.

Labour and cost pressures 🔗

A major contributing factor is the movement of unskilled and semi-skilled labour away from garment manufacturing toward better-paying sectors such as retail, telecom and IT. This has tightened the labour pool available to a highly labour-intensive industry. Rising minimum wages, while beneficial for workers, have simultaneously pushed up production costs at a time when buyers are price-sensitive. High operating costs in metropolitan manufacturing clusters add another layer of pressure, making it harder for Indian units to match the cost efficiency of newer manufacturing hubs.

Fragmentation versus vertical integration 🔗

Perhaps the most structural challenge is fragmentation. Very few Indian exporters have built vertically integrated manufacturing facilities that combine spinning, weaving, dyeing and garmenting under one roof or one tightly coordinated supply chain. Globally competitive rivals have consolidated their operations in exactly this way, allowing them to control costs, turnaround time and quality far more tightly. Without similar consolidation, Indian exporters often struggle to achieve the economies of scale that come naturally to more integrated competitors.

What do you think? 🔗

What do you think? Given India’s strength in value-added, handcrafted garments, should Indian exporters focus on competing with Bangladesh and Vietnam on volume, or double down on premium, design-led apparel where competition is thinner? And with government schemes and new trade agreements now in place, how long do you think it will take before the impact shows up meaningfully in India’s export numbers?

References

1. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2089508
2. https://www.fibre2fashion.com/news/textile-news/india-s-textile-exports-rise-2-1-in-fy26-ftas-to-boost-outlook–309856-newsdetails.htm
3. https://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm5_e.htm
4. https://www.aepcindia.com/about-aepc
5. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2244418&reg=3&lang=2
6. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2254367&reg=3&lang=1
7. https://www.ibef.org/exports/apparel-industry-india
8. https://wwd.com/sourcing-journal/trade/apparel-production-exports-india-china-bangladesh-vietnam-trade-1238873456/