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In a landmark move for India’s second-largest employer, the Union Budget 2026-27 has unveiled a comprehensive transformation roadmap for the textile, apparel, and handicraft sectors. The budget focuses on scale, sustainability, and global competitiveness to propel the industry toward an ambitious target of a $350 billion business size by 2030. Industry leaders have characterized the announcement as a strategic pivot toward modernizing India's "fibre-to-fashion" value chain, with Dr. A. Sakthivel, Chairman of the Apparel Export Promotion Council (AEPC), describing the budget as forward-looking, growth-oriented, and balanced, reflecting a strong commitment to a globally integrated sector.
Strategic pillars of the Budget 2026
The budget introduces several new missions to streamline the fragmented sector, addressing the textile economy from farm-to-factory linkages to high-value exports. Chandrima Chatterjee, Executive Director of the Confederation of Indian Textile Industry (CITI), noted that the budget lays out a comprehensive roadmap through the Integrated Programme for Textile Sector, which encompasses fibres, clusters, handlooms, sustainability, and skilling. These pillars are structured to ensure raw material security and modernized manufacturing, an intent echoed by the Clothing Manufacturers Association of India (CMAI), which stated that the package signals a clear, outcomes-oriented intent to modernize the sector, strengthen livelihoods across the value chain, and accelerate India’s competitiveness in domestic and global markets.
Initiative Primary Focus Objective National Fibre Scheme Raw Material Security Strengthening availability and self-reliance in silk, wool, jute, and MMF. National Handloom & Handicrafts Programme Artisan Integration Integrating and scaling existing schemes to improve market access for small producers. Tex-Eco Initiative Sustainability Promoting globally competitive and environmentally responsible fashion. Samarth 2.0 Skill Development Modernizing the skilling ecosystem through industry-academic collaboration. Mission for Cotton Productivity Agricultural Yield Raising yields, promoting extra-long staple (ELS) varieties, and tech support for farmers.
Sanjay K. Jain, Chairman of the ICC National Textiles Committee, emphasized that these specific announcements become even more significant given the global shifts of the last six months, as the industry needs to build capacity to capture opportunities opening in the global market. He stated that the focus on sustainability, skilling, and capacity scaling is perfectly in tune with building for the future. R.K. Vij, President of the Textile Association (India), echoed this sentiment, highlighting that the budget's focus on capacity building in textiles and technical textiles marks the first time a budget has specifically prioritized Man-Made Fibre (MMF), natural, and new-age fibres.
Modernization and the revival of traditional segments
The budget places a high priority on infrastructure and rural inclusion through the planned establishment of new Mega Textile Parks in mission mode, which aim to attract investment, improve compliance, and create integrated hubs for scale and exports. This is complemented by the Mahatma Gandhi Gram Swaraj Initiative, which is designed to energize khadi, handloom, and handicrafts by promoting inclusive growth and rural livelihoods. Chandrima Chatterjee pointed out that the revival of legacy clusters and these new parks will strengthen competitiveness and support large-scale employment. Furthermore, the Textile Expansion and Employment Scheme aims to modernize traditional clusters through capital support for machinery and common testing centers, which AEPC suggests will greatly enhance productivity in MSME-dominated clusters.
CMAI further noted that the emphasis on skilling through Samarth 2.0 and the broader ecosystem commitments will equip workers with contemporary manufacturing and design skills, enabling productivity gains and faster adoption of Industry 4.0 technologies. Durai Palanisamy, Chairman of The Southern India Mills’ Association (SIMA), pointed out that the announcement of a Capital Support Scheme for Modernization is essential, given that the previous Technology Upgradation Fund Scheme (TUFS) had attracted around ₹4 lakh crore in investment before being discontinued in 2022. He believes this dedicated support will enable the sector to attract the envisaged investment of $100 billion by 2030.
Empowering MSMEs and enhancing liquidity
Recognizing MSMEs as the backbone of exports, the budget introduces robust financial and trade reforms. Dr. Sakthivel stated that the emphasis on liquidity and ease of exports through customs-related reforms will reduce transaction costs and enhance efficiency for exporters. Liquidity is further addressed through the strengthening of the Trade Receivables Discounting System (TReDS), which now includes mandatory onboarding of Central Public Sector Enterprises (CPSEs) and credit guarantee support through the CGTMSE. CMAI highlighted that beyond sector-specific measures, cross-cutting reforms such as tailored credit cards for first-time entrepreneurs and the National Manufacturing Mission will further "Make in India" objectives.
Trade facilitation measures such as the recognition of trusted importers, reduced cargo verification, and factory-to-port clearance using electronic sealing are expected to significantly reduce logistics costs. Chandrima Chatterjee added that measures such as extending export realization timelines and enabling SEZ units to access the domestic market will significantly enhance export efficiency. However, she also cautioned that the industry was looking for a stronger investment incentivisation scheme specifically for sustainable technologies and supply chain logistics to fully leverage future Free Trade Agreements (FTAs).
Sectoral challenges and the cotton crisis
Despite the overarching optimism, the industry has raised critical concerns regarding the cotton value chain. SIMA Chairman Durai Palanisamy expressed that the Budget could have considered the removal of the 11% import duty on cotton, which he deems essential to meet quality cotton shortages and export commitments. He warned that domestic cotton prices have already increased by 5% compared to international prices, a gap that could widen and threaten the financial viability of the entire value chain.
CMAI observed that the Budget appears oriented towards strengthening long-term supply-side and structural interventions rather than catalysing an immediate spurt in consumption. Chandrima Chatterjee reinforced this by stating that the industry was looking forward to specific support for the cotton value chain to address the consistent cost disadvantage it faces due to raw material issues. While the government has already allocated ₹5,900 crores under the Mission for Cotton Productivity, many in the trade, including TAI President R.K. Vij, noted that the industry was expecting changes in custom duties where local capacities are currently short.
Following a protracted absence, the premier denim trade authority Kingpins has confirmed its return to Los Angeles for January 2027. This move signals a significant reinvestment in the North American apparel manufacturing landscape, which is currently valued at over $29 billion. By positioning the event in Southern California, Kingpins aims to catalyze a domestic denim industry that is increasingly shifting toward localized, near-shored production to mitigate global supply chain volatility. Los Angeles remains the epicenter of high-end US denim, housing a specialized ecosystem of wash houses, finishing facilities, and design studios that serve as the blueprint for the global ‘premium denim’ sector.
Sustainable innovation fuels future fabric standards
The 2027 Los Angeles edition will prioritize circular textile technologies, addressing the 44 per cent of global manufacturers now pivoting toward water-saving and regenerative cotton solutions. Industry analysts anticipate the show will spotlight bio-based indigo dyes and ‘smart fabrics’ capable of thermal regulation, which are projected to grow at a 6.5 per cent CAGR through 2035. Vivian Wang, CEO, Kingpins, emphasized, the decision to return home is natural and necessary for an industry currently navigating a ‘recalibration year.’ This initiative offers a vital platform for West Coast designers - who currently lead the vintage and luxury-utility trends - to collaborate directly with global mills on low-impact, high-performance denim developments.
Kingpins is an boutique denim trade show connecting global mills, manufacturers, and chemical suppliers with leading fashion brands and retailers. With a footprint in Amsterdam, New York, and China, the organization focuses on sustainability and textile innovation. Established over 20 years ago, Kingpins is currently expanding its regional pop-ups to strengthen local apparel communities ahead of its 2027 Los Angeles relaunch.
The American apparel import market underwent a significant structural reshuffle in late 2025, according to the latest OTEXA data. In a stark divergence of fortunes, US textile and apparel imports from India plummeted by 31.4 per cent Y-o-Y in November 2025, reaching approximately $0.54 billion. This contraction is largely attributed to the compounding effect of a 50 per cent cumulative tariff wall on Indian goods, which has rendered staples like cotton knits 35 per cent more expensive than competing products. While India grapples with this price disadvantage, Bangladesh also witnessed a 14.5 per cent decline in November, signaling a broader volatility across traditional South Asian manufacturing hubs as buyers prioritize cost-predictability and stable trade access.
Vietnam emerges as the primary beneficiary of trade diversification
In contrast to the regional downturn, Vietnam’s apparel shipments to the US increased by 12.2 per cent in November 2025, solidifying its position as a preferred ‘China+1’ alternative. Vietnam’s total textile exports for 2025 are projected to hit $46 billion, supported by a 52 per cent localization rate in raw materials and strategic utilization of its vast free trade agreement (FTA) network. The shift we are seeing is not just seasonal; it is a strategic migration toward vendors who can absorb geopolitical shocks, noted an analyst from the Confederation of Indian Textile Industry (CITI). As global brands actively de-risk their supply chains, Vietnam’s consistent double-digit growth throughout 2025 underscores a decisive move toward Southeast Asian sourcing for high-volume retail.
Global Sourcing Monitor: Apparel & Textiles
This initiative tracks the performance of key global suppliers - China, Vietnam, India, and Bangladesh - in the $100 billion US fashion market. Focused on apparel and home textiles, the tracker monitors how tariffs and FTAs drive sourcing shifts. Growth plans for 2026 involve deeper integration into technical textiles and sustainable fabrications to offset rising labor costs.
China’s personal luxury market is entering an important recalibration phase, with Bain & Company projecting a return to modest growth in 2026 following a contraction of 3 per cent to 5 per cent in 2025. This recovery is characterized by a stark ‘V-shaped’ polarization: ultra-premium houses and affordable luxury labels are outperforming the broader market. Consumers are increasingly discarding mid-tier ‘aspirational’ goods in favor of items that retain long-term financial or emotional value. While beauty has emerged as a resilient leader with 4 per cent to 7 per cent growth, the fashion and leather goods sectors faced steeper declines of up to 11 per cent last year, pressured by significant price hikes and a shift toward ‘quiet luxury.’
Domestic ‘local heroes’ challenge global giants
A significant structural shift is the meteoric rise of ‘local hero’ brands like Songmont and Laopu Gold, which captured approximately 15 per cent of the luxury fashion market in 2025. These homegrown players are successfully blending cultural heritage with innovative designs, resonating deeply with a nationalistic Gen Z demographic. The era of easy growth for Western brands is over; the consumer has evolved from buying for status to buying for identity, noted a senior partner at Bain. Strategic focus is now shifting toward domestic spending - which accounted for 65 per cent of total luxury outlays in 2025 - supported by government policy measures aimed at stimulating internal consumption and the burgeoning middle class.
China’s high-end retail landscape
Operating as the world’s second-largest luxury market, China remains a critical growth engine for global conglomerates like LVMH and Richemont. The sector focuses on high-net-worth individuals and an expanding middle class across Tier-I and Tier-II cities. Despite current real estate headwinds, long-term plans emphasize digital-first engagement and localized storytelling to capture the $100 billion potential by 2030.
Adidas defied broader macroeconomic volatility with 13 per cent rise in currency-neutral revenues to €24.8 billion in FY25. This growth was remarkably balanced across all global markets, led by a 21 per cent rise in Latin America and resilient 10 per cent gains in Greater China. The ‘terrace’ footwear trend - headlined by the Samba and Gazelle - remained a significant revenue engine, while the performance apparel segment recorded a 16 per cent increase, boosted by a strong year for global football and running. The brand’s operating profit more than doubled in Q4, FY25 culminating in a full-year operating profit of €2.06 billion, up from €1.34 billion in 2024.
Quality growth mitigates supply chain and tariff pressures
The company’s ‘local mindset’ strategy has proven instrumental in maintaining a historically high gross margin of 51.6 per cent. By prioritizing full-price sell-throughs and disciplined inventory management, Adidas successfully navigated rising US tariffs and currency fluctuations that posed a €1 billion headwind. We have managed to keep discounts under control while ensuring the right product reached the right markets, stated Bjørn Gulden, CEO. Buoyed by this momentum, the executive board approved a €1 billion share buyback program set to commence in February 2026. Looking ahead, the brand is positioning itself to capture further market share through high-profile collaborations and the upcoming Winter Olympics in Italy.
Headquartered in Germany, Adidas is a leading designer and retailer of athletic footwear, apparel, and accessories. It operates globally across performance and lifestyle (Originals) categories. Following a successful 2025 turnaround, the company aims for double-digit growth and a 10 per cent operating margin by late 2026, leveraging its 75-year heritage of innovation.
H&M (Hennes & Mauritz AB ) has reported a significant strengthening of its financial foundation, highlighted by a 38 per cent increase in operating profit to SEK 6,364 million for Q4, FY25. Despite a modest 2 per cent rise in local currency sales, the group’s operating margin increased to 10.7 per cent, up from 7.4 per cent the previous year. This performance reflects an aggressive institutional push toward high-margin efficiency, characterized by a 12 per cent reduction in stock-in-trade to SEK 35,427 million. By optimizing inventory productivity to 15.5 per cent of rolling 12-month sales, the Swedish retailer has effectively neutralized the overhead of a retail estate that shrunk by 152 stores in 2025.
Strategic capital allocation and supply chain re-engineering
H&M is transitioning from a period of heavy supply chain investment to a phase of technological deployment. For 2026, the group has earmarked SEK 9–10 billion in capital expenditure to modernize its store portfolio and digital infrastructure. A pivotal component of this strategy is the gradual rollout of new logistics solutions across Europe, aimed at slashing lead times and enhancing fulfillment flexibility. While currency translation effects from a strengthened Swedish krona slashed reported net sales by 7 percentage points in Q4, the group’s focus on ‘sourcing excellence’ has successfully insulated gross margins, which rose to 55.9 per cent during the period.
Decarbonization milestones and 2026 market outlook
The 2025 full-year report also showcased substantial progress in H&M’s ‘future-proofing’ agenda, with Scope 3 greenhouse gas emissions reduced by approximately 30 per cent against a 2019 baseline. This ecological discipline is now being integrated into the brand’s commercial identity, evidenced by its A-listing by CDP and leadership in the 2025 Fashion Revolution transparency reports. Looking ahead, H&M anticipates a 2 per cent sales dip for the December–January window, citing a post-Black Friday demand cooling and a negative calendar effect from the Chinese New Year. However, with a proposed dividend increase to SEK 7.10 and a new share buyback authorization, the board remains confident in its ability to navigate a volatile global trade environment.
H&M Group is a global fashion powerhouse operating brands including H&M, COS, and Arket. Specializing in affordable, trend-driven apparel, the firm operates over 4,100 stores across 75+ markets. With online sales now exceeding 30 per cent of total revenue, H&M is targeting an 8.1 per cent operating margin floor while expanding into high-growth territories like Brazil.
The conclusion of the Winter 2026 edition of Texworld New York City and Apparel Sourcing NYC on January 22, 2026, has highlighted a significant realignment in the North American textile landscape. As US fashion companies aggressively pursue a ‘China Plus One’ strategy, the event served as a critical barometer for a market navigating sharp import volatility. Recent data from the Office of Textiles and Apparel (OTEXA) indicates, US apparel imports from China plummeted to just 11.3 per cent in value by late 2025, a historic low that has catalyzed a surge in interest for alternative production centers.
Rising dominance of value-added Asian corridors
The show floor at the Javits Center underscored the growing influence of Bangladesh, Korea, and Uzbekistan, which were among the five featured country pavilions. In particular, Bangladesh has emerged as a primary beneficiary of the structural decoupling from Chinese supply chains, seeing its export value to the US jump 15 per cent Y-o-Y to reach $7.08 billion in the most recent fiscal period. However, this growth comes with a strategic pivot; exhibitors are no longer competing solely on volume. Industry analysts note, current sourcing trends for 2026 prioritize ‘margin over market share,’ with a notable 1.57 per cent increase in unit prices for value-added garments, reflecting a shift toward high-performance technical textiles and intricate hand-finished apparel.
Institutionalizing transparency through the Innovation Hub
The newly expanded Innovation Hub at Texworld 2026 addressed the industry’s most pressing hurdle: the integration of digital traceability to comply with tightening global regulations like the EU Corporate Sustainability Due Diligence Directive (CSDDD). Sourcing professionals are increasingly adopting 3D design platforms - which can accelerate design cycles and reduce material waste by up to 30 per cent - and blockchain-based tracking to verify ethical labor practices. As US consumer confidence fluctuates, the focus has shifted toward building ‘future-ready’ supply chains. This transition is moving the industry away from transactional buying and toward long-term, transparent partnerships that can withstand the logistical pressures of a potential $2 trillion global textile market projected for late 2026.
A premier global trade fair organizer, Messe Frankfurt manages the Texworld Evolution umbrella which connects thousands of manufacturers across NYC, Paris, and Los Angeles. Specializing in apparel, home textiles, and technical fabrics, the group is currently focused on scaling its Innovation Hub to facilitate digital transformation and sustainable procurement for North American retailers.
Associated British Foods (ABF) has confirmed a major strategic shift for its fast-fashion flagship, Primark as it finalizes franchise partnerships to establish a physical footprint in the United Arab Emirates, Saudi Arabia, and Kuwait. This expansion is designed to tap into a regional apparel market projected to reach a valuation of $85 billion by 2027, driven by a young, fashion-conscious demographic and a high density of premium retail real estate.
Localized assortments and the supply chain challenge
The Middle Eastern entry necessitates a fundamental recalibration of Primark’s high-volume, low-margin inventory model. Unlike its European stores, the GCC outlets will feature ‘heat-responsive’ collections, prioritizing lightweight breathable fabrics and modest fashion segments to align with local cultural and climatic requirements. While the retailer reported an 8.4 per cent revenue increase to £9.4 billion in its latest annual filing, the logistics of servicing the Middle East from its traditional South Asian and European supply hubs present a significant overhead risk. To maintain its competitive price floor, Primark is exploring regional distribution centers in the Jebel Ali Free Zone, aiming to cut lead times for its ‘Primark Cares’ sustainable line, which now constitutes 55 per cent of its total sales volume.
Navigating competitive landscapes and digital hurdles
Primark’s brick-and-mortar centric strategy will face a unique test in the Middle East, where e-commerce penetration is among the highest globally. While competitors like H&M and Inditex have matured digital platforms, Primark continues to rely on its ‘click-and-collect’ hybrid model to drive footfall. The challenge lies in replicating our high-density basket value in markets dominated by digital-first players like Shein, noted a retail analyst covering the region. However, the brand’s ability to offer ‘value-tier’ pricing in luxury-heavy malls provides a unique market positioning. Success in the GCC is viewed as a prerequisite for Primark’s broader goal of operating 535 stores globally by 2026-end, effectively de-risking the brand from the economic fluctuations currently dampening UK high-street performance.
Primark is a leading international clothing retailer headquartered in Dublin, specializing in high-volume, affordable fashion and home goods. Established in 1969 as Penneys, the firm now targets a global fleet of 535 stores by late 2026. Recent financial performance shows robust health, with annual revenues surpassing £9.4 billion.
In a decisive move to safeguard its ‘Made in Italy’ heritage, the Prada Group has terminated partnerships with 222 suppliers and subcontractors over the past five years. Finalized in late January 2026, this mass listing follows a rigorous audit cycle involving over 850 on-site inspections since 2020. The group’s internal audit teams utilized a ‘zero-tolerance’ framework, conducting unannounced overnight monitoring to detect unauthorized outsourcing and labor law violations. While the luxury sector often faces criticism for opaque supply chains, Prada’s recent disclosures indicate that over a quarter of their inspections resulted in immediate corrective actions or termination.
Strategic move towards vertical integration
Beyond ethical compliance, these terminations signal a broader consolidation of Prada’s production architecture. By pruning non-compliant entities, the group is intensifying its vertical integration strategy to mitigate reputational risk and ensure extreme quality control. This internal cleanup coincides with Prada’s recent 10 per cent equity investment in Rino Mastrotto Group, a key leather and textile provider, further securing their upstream value chain. Lorenzo Bertelli, Head-Social Responsibility, Prada, emphasized, while global transparency is evolving, the group’s ‘Qualified Vendor List’ now mandates 100 per cent adherence to new digital traceability protocols as a condition for contract renewal.
Financial resilience amid institutional reform
Prada’s aggressive supply chain discipline has not hindered its market performance. The group reported its 19th consecutive quarter of growth in late 2025, with nine-month retail sales increasing by 9 per cent to €3.65 billion. This financial cushion has allowed the firm to absorb the costs of shifting production away from high-risk subcontractors toward more transparent, long-term partners. As the luxury market navigates a complex ESG regulatory landscape in 2026, Prada’s proactive ‘audit-and-exit’ approach positions the brand as a leader in industrial accountability, effectively insulating its €250 billion target valuation aspirations from the legal and social fallout of labor exploitation.
A titan of Italian luxury, Prada Group operates brands including Prada, Miu Miu, and Church’s, specializing in leather goods, footwear, and ready-to-wear. Historically founded in 1913, the group now targets double-digit retail growth across Asia and the Americas, underpinned by a 9 per cent revenue rise in 2025.
On January 28, 2026, Allbirds, Inc announced a definitive exit from its full-price brick-and-mortar operations in the United States. By February 2026-end, the sustainable footwear pioneer will shutter its remaining 20+ US retail locations, marking a total reversal of its once-aggressive physical expansion strategy. This consolidation follows a turbulent FY25, where the company reported a 23.3 per cent Y-o-Y revenue decline to $33 million in its third quarter. By eliminating high-occupancy overhead, the San Francisco-based firm aims to stem a net loss that reached $20.3 million in the same period, redirecting focus toward higher-margin wholesale and digital channels.
Transitioning to a third-party growth model
The closure of unprofitable ‘doors’ is the cornerstone of a broader multi-year turnaround led by Joe Vernachio, CEO. Allbirds is shifting its primary physical presence to a distributor-led model, having recently finalized agreements with eight international partners covering territories from Scandinavia to Japan. Domestically, the brand will now rely on wholesale titans like REI and Dick’s Sporting Goods for floor space, a move that reduces the burden of lease liabilities while maintaining consumer reach. This ‘capital-light’ approach is reflected in the company's tightened inventory, which decreased 25 per cent annually to $43.1 million, signaling a disciplined push toward a more agile, demand-driven supply chain.
Financial outlook and institutional de-risking
With a market valuation currently hovering near $32 million - a fraction of its $4 billion peak- Allbirds’ survival hinges on achieving positive adjusted EBITDA by late 2026. The exit from direct retail is expected to yield significant SG&A savings, which the company will detail in its March 2026 earnings call. While the firm will maintain two outlet stores in the U.S. and two flagships in London as brand touchpoints, the overarching strategy prioritizes liquidity over scale. This institutional reform is designed to insulate the brand from the volatility of high-street retail, position21 per cent revenue drop ing Allbirds as a specialized sustainable materials company rather than a traditional retailer.
Founded in 2015, Allbirds specializes in sustainable footwear using Merino wool and sugarcane-based SweetFoam. Primarily targeting the North American and Asian lifestyle markets, the company is turning toward a wholesale-first model to restore profitability. Despite a 21 per cent revenue drop in 2025, the firm eyes a global footprint of 500+ third-party points of sale by 2027.
