India's Textile Exports Poised for Growth
According to a report by Motilal Oswal, India's textile exports are likely to improve as declining Chinese apparel export shares create fresh opportunities amid growing free trade agreements (FTAs) and global demand recovery. The report highlights that global apparel retailers and brands are becoming increasingly optimistic about growth prospects due to stabilizing inventories, better sell-through trends, and recovering discretionary demand across the US and Europe.
"This is leading to improved sourcing visibility and healthier ordering cycles, which is positive for Indian textile exporters through stronger order flows, better capacity utilization, and improved margin visibility," the report said.
India-UK FTA as a Key Growth Driver
A key growth driver for the sector is the recently concluded India-UK Free Trade Agreement (FTA), which is expected to significantly improve the competitiveness of Indian textile and apparel exports in the UK market. The UK imports nearly USD 20 billion of apparel, but India holds only about 6% of the UK's market share due to an 8-12% import duty disadvantage compared to countries such as Bangladesh, Turkey, and Cambodia that enjoy duty-free access.
"The proposed FTA is expected to remove import duties, significantly improving India's competitiveness in the UK market and aligning it with key sourcing nations," the report noted.
China's Declining Apparel Share Creates Opportunities
China's declining apparel export share from 37% in CY14 to 29% in CY24 is creating a significant opportunity for India, which is well-positioned to capture share through recent trade agreements, PLI scheme support, and expanding production capacity. Combined with the ongoing China+1 sourcing strategy and rising labor costs in China, the agreement could help Indian exporters gain a larger share of the UK market.
"Over the medium term, India's UK apparel exports are likely to increase as global brands diversify sourcing, similar to Vietnam's strong post-FTA growth trajectory," the report added.
Expanding Global Market Share
Overall, the continued decline in China's apparel exports to the US is creating a significant opportunity for Indian exporters to expand their global market share. China's share of global apparel exports fell to 29% in CY24 from 37% in CY14, while its share of US apparel imports dropped to 22% in 2023 from 37% in 2019, as per the report.
While Bangladesh and Vietnam have traditionally benefited from lower costs and favorable trade agreements, "India is increasingly well-positioned due to the recent new trade agreements, large production capacity, improving infrastructure, and strong government support through initiatives such as the PLI Scheme for Textiles, and the development of mega textile parks."
