Driven by major global trade dynamics and a concerted effort by multinational retailers to diversify their sourcing away from China, India’s apparel export industry is undergoing a significant strategic shift. As per a recent report by Antique Research, the country’s strong manufacturing base, competitive labor costs and rapidly expanding product capabilities make it a key beneficiary of this transition.
While competitors like Bangladesh and Vietnam have historically dominated global apparel exports, India is quickly gaining ground. This shift is fueled by geopolitical realignments, trade tensions, and the rising global emphasis on building more sustainable and diversified supply chains—the so-called ‘China+1’ strategy.
This structural change is opening new doors for Indian garment manufacturers, supported by several domestic improvements, notes the report. These include an improving infrastructure and supply chain efficiency, incentives like the Production-Linked Incentive (PLI) schemes and enhanced adherence to international standards.
The United States and European Union remain India’s largest apparel markets, showing renewed interest in key segments like cotton garments, knitwear, and value-added fashion apparel.
Despite the positive momentum, the report warns of substantial challenges, primarily centered on market access. For instance, India lacks Free Trade Agreements (FTAs) with key markets, resulting in high import tariffs. For instance, Indian apparel exports to the EU face average tariffs of 9–12 per cent, while competitors like Bangladesh enjoy zero-duty access under the EU's Everything But Arms (EBA) initiative.
These tariff disadvantages are eroding India’s price competitiveness, making exports -especially in ready-made garments (RMG) and home textiles - less viable.
The industry is optimistic that a significant 25 per cent tariff could be lifted by the end of the fiscal year.
Beyond tariffs, Indian producers still grapple with hurdles like compliance costs, volatile cotton prices, and a fragmented manufacturing ecosystem. However, the forthcoming FTAs with the UK and EU are critical to leveling the playing field, the report notes.
If tariff barriers are successfully addressed and domestic supply chain reforms continue, India is well-positioned to significantly increase its market share of the $500-billion global apparel export market over the next decade.
