FW
India’s textile and apparel export sector is showing a remarkable capacity to adapt and thrive in one of the most turbulent global trade environments in recent years. From punitive US tariff shocks to unpredictable demand cycles across international markets, the sector’s first-half performance (April-September 2025) reveals not just survival, but strategic reinvention.
Despite the headline showing a marginal 0.39 per cent growth in overall global exports, a deeper look at the numbers tells a different story one of intentional diversification, policy-backed resilience, and targeted expansion into new and emerging markets. The textile industry, one of India’s largest employment generators, is quietly rewiring its export engine for a more volatile global order.
Flat global growth, strong market focus
The data for the April-September period captures a dual-speed export reality. While global shipments of textiles, apparel, and made-ups saw only muted growth, rising from $17.66 billion to $17.73 billion, a negligible increase of 0.39 per cent the sector’s performance in targeted growth markets tells a far more encouraging story.
Table: India’s export performance April-September 2025
|
Metric |
April–September 2025 |
April–September 2024 |
Change |
Takeaways |
|
Exports to 111 Targeted Markets |
$8,489.08 mn |
$7,718.55 mn |
+10.0% |
Focus areas grew robustly. |
|
Overall Global Exports of Textiles, Apparel & Made-ups |
$17,735.56 mn |
$17,666.51 mn |
+0.39% |
Sector was largely flat (marginal 0.1% growth mentioned in image text). |
The 10 per cent growth in the 111 priority markets compared to the almost stagnant global number highlights a sector that is consciously moving away from its traditional overdependence on a handful of legacy destinations, particularly the US and Europe. This strategy mirrors India's broader export pattern. While India’s total merchandise exports grew by 3.02 per cent, textiles significantly outperformed in markets where government-led diversification strategies have been applied with precision. Ready-made garments (RMG) and jute were among the notable bright spots RMG grew 3.42 per cent, while jute expanded 5.56 per cent, signaling sustained global demand for natural fiber-based, sustainable products.
The rise of non-traditional markets
If the last decade was defined by dependence on the US and EU, this year marks the beginning of India’s new export geography. Several emerging markets delivered double-digit growth, providing vital cushioning against the steep decline in tariff-affected markets like the US.
Table: Market growth trends (Apr–Sep)
|
Market |
Growth (YoY) |
Interpretation |
|
Japan |
+19% |
Strong traction for high-quality apparel and technical textiles; Japan emerges as India’s stability market. |
|
UAE |
+14.5% |
A regional re-export and retail powerhouse; Indian brands seeing renewed traction. |
|
France |
+9.2% |
Premiumization and sustainable materials are driving orders. |
|
Spain |
+9% |
Fast-fashion and mid-market retailers increasing sourcing from India. |
Table: New market momentum
|
New Region |
Growth (YoY) |
Interpretation |
|
Hong Kong |
+69% |
Reflects China+1 shifts and sourcing realignments. |
|
Egypt |
+27% |
India filling supply gaps after local currency pressures and import constraints. |
|
Saudi Arabia |
+12.5% |
Retail modernization and new mall expansion fueling apparel growth. |
This diversification is not accidental. It stems from sustained engagement through trade missions, revamped export incentives, and collaborative agreements pushed aggressively under India’s Make in India and Aatmanirbhar Bharat frameworks.
US tariff hits India’s largest market
The most dramatic shock of the year came from Washington. In late August, the US slapped a 50 per cent tariff on multiple Indian goods including textiles and apparel ostensibly in response to India’s continued imports of Russian oil. For a sector where the US traditionally accounts for nearly 28 per cent of all exports, the impact was immediate and severe.
Table: September 2025 tariff shock, decline in US shipments
|
Segment |
September 2025 value |
September 2024 value |
Change (YoY) |
|
Ready-Made Garment (RMG) Exports |
$997.54 mn |
$1,110.15 mn |
-10.14% |
|
Textile Exports (excluding Apparel) |
$1,624.06 mn |
$1,813.63 mn |
-10.45% |
|
India's Overall Exports to US |
$5.46 bn |
$6.20 bn |
-11.93% |
The US decline stands in stark contrast to double-digit export growth in non-traditional markets. It also highlights a structural vulnerability: India’s largest buyer can dramatically shift sectoral momentum with a single policy decision.
India responds with a $5 bn export lifeline
To counter the tariff shock and boost exporter liquidity, the government of India announced a powerful package combining direct export support, credit guarantees, and compliance funding. At the heart of this policy overhaul is the Export Promotion Mission (EPM), a unified, nearly $ 3 billion or Rs 25,060 crore program running through FY 2030-31. Alongside this is a $2.3 billion credit guarantee scheme, replacing multiple older schemes and creating a streamlined, MSME-friendly system.
Table: Components of EPM
|
Sub-Scheme |
Focus Area |
Goal |
|
Niryat Protsahan |
Financial Support |
Provide affordable trade finance and credit guarantees to MSME exporters, helping them absorb tariff costs and maintain liquidity. |
|
Niryat Disha |
Export Readiness & Compliance |
Enhance global competitiveness through support for quality certification, global branding, logistics, and meeting non-tariff barriers, essential for competing with lower-tariff countries like Vietnam and Bangladesh. |
The industry views this as the most cohesive export framework in over a decade. By unifying fragmented schemes, the government aims to increase scale efficiency, ease of compliance, and competitiveness.
De-risking, re-skilling and re-positioning
The sector’s growth path for 2026 and beyond will be shaped by two factors: market de-risking and manufacturing competitiveness.
Market diversification as a strategic insulation: The strong growth in 111 targeted markets provides a blueprint for insulating exports from political or economic shocks. Fast-moving FTAs with the UK and EU are expected to offer duty-free access potentially transforming India’s pricing advantage over Vietnam, Turkey, and Bangladesh.
Infrastructure-led competitiveness: The PM MITRA Parks, seven mega integrated textile and apparel zones are designed to cut logistics costs by up to 10-12 per cent, improve turnaround times, and allow India to compete more effectively with China’s vertically integrated clusters.
The $100 bn ambition: India aims to more than double its textile and apparel exports to $100 billion by 2030. While ambitious, analysts say the first-half performance shows the foundational pieces are falling into place: wider export geography; stronger policy scaffolding; shift toward value-added products; better logistics and integrated parks; early FTA tailwinds
Thus India’s textile industry enters 2026 with scars from tariff shocks, but with renewed confidence and broader shoulders. The sharp US decline could have crippled the sector a decade ago. Instead, today it stands more diversified, better supported, and more globally aligned than ever.
By betting on emerging markets, accelerating policy reforms, and building world-class supply-chain ecosystems, India is crafting a more shock-resistant export engine one capable not only of surviving global turbulence but of shaping new competitive spaces.
Sri Lanka’s apparel and made-up articles sector demonstrated resilience, recording a robust 6.12 percent year-on-year increase in total exports for the cumulative period of January to October 2025. The Joint Apparel Association Forum (JAAF) noted that the sector "continues to hold steady despite challenging global conditions," highlighting the industry's ongoing investments in competitiveness. This strong performance saw total apparel exports sustain momentum over the first ten months of the year.
Market Divergence: EU powers ahead
While the overall January-to-October performance was strong, October 2025 saw a marginal decline of 0.05 percent compared with the previous year. This slight dip was driven by major market slowdowns, as shipments to the USA fell by 1.92 percent, and exports to the UK dropped by 11.99 percent during the month. Conversely, the European Union (EU) remained a powerhouse, recording strong growth of 12.53 percent in October. For the cumulative period, exports to the EU showed a substantial 14.05 percent increase, while the USA recorded more modest growth of 1.37 percent.
Industry Outlook: Diversification and policy support
JAAF emphasized that the positive cumulative figures "reflect the industry's resilience" and its commitment to meeting international buyer needs. Exports to the UK and other markets also reported modest cumulative growth of 0.98 percent and 8.31 percent, respectively, over the same period in 2024. Looking ahead, the industry views sustained market diversification and consistent policy support as essential to build on this momentum.
Fashion for Good announced a major step toward sustainable fashion on November 27, 2025, with the launch of the Future Forward Factory blueprint. This first-of-its-kind, open-source guide is designed to break the decarbonization deadlock in textile manufacturing, which is one of the industry's biggest emissions hotspots.
The blueprint provides five practical, financially viable pathways for Tier 2 manufacturers in India—focusing on textile dyeing, treatment, and finishing—to achieve near-net-zero operations. Full implementation of the processes and infrastructure upgrades can lead to a drastic 93% reduction in carbon emissions, alongside a 33% drop in water usage and a 41% cut in electricity consumption.
By including critical financial analysis like payback periods and an overview of government incentives, the blueprint provides a clear, implementable "how-to" for factory transformation, systematically dismantling the barrier of high upgrade costs.
Developed with partners including Laudes Foundation and anchor partner Arvind Mills, Fashion for Good is already exploring the set-up of the first fully operational Future Forward Factory to serve as a real-world proof of concept. This initiative aims to accelerate the fashion industry’s essential transition to a regenerative future.
The European apparel and textile sector is bracing for mandatory price increases following the fast-tracked EU decision to abolish the €150 customs duty exemption (de minimis) for non-EU e-commerce imports. This shift, set for early 2026 rather than the original 2028 target, aims to level the playing field for domestic retailers. The change will impose tariffs and potential handling fees—such as the proposed €2 charge per low-value shipment—directly onto the massive influx of foreign goods. This directly affects the profitability model of ultra-low-cost online giants like Shein and Temu, which drove the surge of over 4.6 billion low-value parcels into the bloc last year, with over 90% originating from China.
Mandatory data and compliance friction
Beyond tariffs, the industry must contend with heightened compliance expenses under the Import Control System 2 (ICS2). This requires e-commerce platforms and carriers to submit granular data, including precise 6-digit Harmonized System (HS) codes and consignee details, before goods arrive. Non-compliance, such as using vague product descriptions, risks shipment rejection and administrative penalties, directly increasing supply chain friction and costs.
For established European retailers, who are currently struggling against the competition that has captured an estimated 20% of the EU's online clothing market, the customs overhaul presents a critical, if delayed, opportunity to regain competitiveness and ensure imported garments meet EU safety and sustainability standards.
Renowned designer Patricia Urquiola is set to present a completely new and immersive design experience, 'among-all,' at Heimtextil 2026, running from January 13 to 16, 2026. This installation, located in Hall 3.0, is the second chapter in her ongoing exploration of "textile thinking" and places human interaction at its core.
Visitors become active participants as their movements are detected by an AI-driven LED wall and morphed into hybrid beings, demonstrating how textiles function as transformative and intelligent materials that combine craftsmanship and technology.
The project strongly emphasizes circular and sustainable design. Material highlights include Ohoskin, an Italian textile made from orange by-products that serves as a high-performance alternative to leather, and carpets created from woolen salvages and production remnants by 13RUGS by rohi. Furthermore, a 3D-printed entrance portal is made from ECONYL chips. 'among-all' offers a futuristic vision of interior design where material life cycles are embedded in the creation process.
The Renewable Materials Conference (RMC) 2026 is set to be the premier international meeting point for shaping the future of the renewable carbon economy. Scheduled for September 22–24, 2026, in Siegburg/Cologne, Germany, the event, organized by the nova-Institute, will focus on "Defossilisation through innovation".
Defossilisation—replacing fossil carbon with renewable sources like biomass, direct CO2 utilisation, and recycling—is increasingly recognized as the only viable path to a climate-neutral chemical and plastics sector. With the extraction and use of fossil resources being the largest contributor to human-made climate change, the conference will tackle this critical transformation.
The RMC is expected to gather 400–500 participants from across the globe, including innovators, companies, brands, investors, and policymakers. Attendees are invited to take part in the transformation now, with early bird registration, exhibition and workshop booking, and abstract submissions already open. A key highlight will be the "Renewable Material of the Year 2026" award, for which innovations are currently being accepted.
Vietnam's textile and garment sector, the world's third-largest exporter behind China and Bangladesh, is set for robust expansion, projecting export revenues to hit $46 billion in 2025, representing a solid 5.6% year-on-year increase. This optimism is driven by manufacturers successfully securing orders well into the first quarter of 2026, a clear sign of global brands continuing to diversify sourcing away from China. The United States remains the key driver, expected to contribute $18.6 billion in revenue, an over 11% rise from the previous year, underscoring Vietnam's critical role in the global apparel supply chain.
The crucial green and digital shift
However, this growth trajectory is contingent on addressing significant internal challenges, particularly the pressure to meet increasingly stringent global sustainability standards. To maintain competitiveness, the sector is currently undergoing a "dual transformation": digitalization and greening. Industry leaders, like the Vietnam Textile and Apparel Association (VITAS), emphasize that this transition is mandatory, not optional. Key initiatives include massive investments in AI-powered production lines and Cold-Pad-Batch (CPB) dyeing technology, a greener process that can reduce utility costs by over 70% and lower emissions.
Navigating rising costs and trade policy
Despite its strong export performance, Vietnamese production costs are reportedly 40-45% higher than rivals like Bangladesh, and the country remains heavily dependent on importing up to 95% of its raw materials, including cotton and synthetic fibers. This dependency creates vulnerability, especially under tightening rules of origin within Free Trade Agreements (FTAs) like the EVFTA. Therefore, the strategic focus is on increasing the domestic value-added rate (currently around 52%) and attracting high-tech foreign direct investment to close the local supply chain gaps.
Lululemon's new 17,000-square-foot flagship store in New York City's highly competitive SoHo district is more than just an expansion—it's the North American debut of a critical, new global retail design concept. This substantial investment comes as the premium athletic apparel brand battles slowing sales growth in the Americas, with comparable sales declining by 4% in the recent quarter. The SoHo location, which replaces a smaller local store, serves as a high-stakes case study in how Lululemon plans to "re-energize" its domestic market by shifting focus from transactional retail to an elevated, sensory-driven guest experience.
The Experience-First strategy
The design, featuring 3D-printed recycled materials, hand-formed tilework, and a distinct lighting installation, is rooted in "movement, connection, and sensory engagement." This approach aligns with Lululemon's broader 'Power of Three Times 2' strategy, which aims for $12.5 billion in revenue by 2026 by focusing on premium product innovation and guest experience. "Every detail has been curated to evoke emotion and connection," stated Darin Rabb, SVP of Global Brand Creative, suggesting that the brand is banking on physical design to combat increasing competition from younger athleisure labels and to justify its premium price point amid economic pressure.
Lululemon's 'Power of Three X 2' growth pillars
The brand's ambitious growth plan, 'Power of ThreeX 2', is designed to achieve $12.5 billion in total revenue by 2026—a doubling of 2021 net revenue. The strategy is anchored by doubling down on three key pillars: Product Innovation (extending core franchises and creating new technical apparel), Guest Experience (driving engagement through technology and community-focused physical stores like SoHo), and Market Expansion (quadrupling international revenue, focusing heavily on regions like China and Europe). This strategy guides all major investments, including the new flagship's experiential design.
Corporate shifts and global momentum
The store opening coincides with significant executive changes, including the departure of a long-time President of the Americas, underscoring the need for a strategic reset in the region. Meanwhile, Lululemon's International segment remains the growth engine, with net revenue surging by 22% in the last reported quarter, largely driven by expansion in China and Europe.
The SoHo flagship, set to serve as the blueprint for future North American stores, is tasked with replicating that international momentum domestically, proving that high-touch physical retail can still drive engagement even when the domestic market is struggling with product "staleness," as acknowledged by the CEO.
The youth-focused fashion brand Monki, part of the H&M Group, is making a decisive shift, eliminating all its standalone physical stores to operate as a completely digital-first entity. This aggressive move is a direct response to the challenging global retail landscape, where profitability is increasingly difficult to achieve through traditional brick-and-mortar networks, a factor contributing to the H&M Group’s reported 42% decline in Q1 2025 operating profit. Monki is abandoning the operational overhead associated with its global physical footprint, which recently comprised approximately 48 stores across 15 international markets, as part of the Group’s strategic drive to reduce complexity and concentrate investment in high-return digital channels.
Integrating into the weekday digital ecosystem
Monki's new strategy centers on its integration into the Weekday brand platform, which is also owned by H&M Group. This consolidation is designed to create a more powerful and streamlined multi-brand digital destination aimed at the 'creative generation.' The move blends Monki’s distinct graphic and street-style aesthetic with Weekday's established denim and contemporary casual wear range. This integration is crucial for competing with ultra-fast digital rivals by offering a unified and comprehensive online shopping experience. A limited number of former Monki retail locations will be transformed into multi-brand Weekday stores, providing a highly curated physical space for the combined offering.
H&M’s case study in retail rationalization
This transition—from a physical store model to purely digital with select retail presence within a sister brand—serves as a compelling case study in how established fashion conglomerates like H&M Group are adapting to omnichannel realities. By shifting Monki’s substantial digital revenue stream to a more efficient, capital-light model, the Group aims to eliminate the drag of underperforming leases. This focused investment aligns with H&M’s broader push to optimize its total store count by a net of 110 locations in 2025, directing resources toward better digital personalization and high-growth markets, ensuring Monki's long-term commercial viability within the larger portfolio.
The Indian textile supply chain is facing a significant bottleneck in the downstream garment sector, leading to an acute decline in cotton yarn prices across major trading hubs. In Mumbai, South Indian cotton yarn rates have fallen by an estimated ₹5 to ₹8 per kg, driven by intense selling pressure from stockists and spinning mills. This downward trend is a direct result of sluggish fabric lifting from readymade garment units and tight payment conditions throughout the value chain. India's textile exports, particularly ready-made garments, saw a 12.9% slump in October 2025 due to global demand slowdown and high US tariffs, compounding the domestic inventory issue.
The weakening demand cycle
The issue stems from global economic uncertainty, which has lowered demand for finished apparel and, consequently, reduced fabric production. "Slow lifting of fabric from the garment industry is the real problem," noted a Mumbai-based trader, adding that weaving units are actively discouraging higher production. This creates a classic demand-side weakness where spinners are forced to offer steeper discounts to clear inventories and improve cash flow. This challenging scenario threatens the operational viability of smaller, less financially robust spinning mills, despite the fact that India's domestic cotton yarn production and sales volumes remain relatively stable, supported by domestic apparel and home textile sectors.
Industry outlook and mitigating factors
While the immediate outlook is bearish, the industry is closely monitoring global factors. The removal of the Quality Control Order (QCO) on certain man-made fibres (MMF) intermediates by the government is expected to ease raw material costs for the downstream garment sector, potentially boosting demand for yarn as an input.
Furthermore, an expected recovery in domestic demand is forecasted to drive cotton yarn volumes up by 5-6% in 2026. However, the pressure on the ₹4,500 Cr spinning segment highlights the vulnerability of India's textile sector to global demand swings and the need for stronger financial support for the entire value chain
