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In 2024, US and EU retailers shifted cotton garment orders from China and Bangladesh to Vietnam, with India also experiencing a 20 per cent Y-o-Y growth in cotton textile exports during April-December. This shift reflects a ‘China Plus One’ strategy, where retailers diversify their sourcing.
China's market share in the US declined by 1 per cent in 2024, translating to approximately Rs 6,900 crore in lost business. This share was distributed among competing nations, including India, which gained 0.2 per cent, raising its market share to 5.9 per cent.
Data from Texprocil and the Ministry of Commerce & Industry shows, India's cotton yarn, fabric, and handloom exports grew by nearly 12 per cent in December 2024 compared to December 2023. Over the April-December period, these exports increased by 2.82 per cent, while apparel exports rose by 11.5 per cent.
Industry experts attribute this growth to diverted orders from Bangladesh, creating strong demand for domestic yarn and garment exports. The weakening rupee further enhances India's competitiveness. Additionally, new US tariffs on small parcels from China present an opportunity for India to expand its e-commerce fashion exports.
However, Vietnam has increased its cotton purchases from the US, Brazil, and West Africa due to lower prices compared to Indian cotton. Vietnam also benefits from no customs duties on cotton imports.
The Indian cotton market remains stagnant, with the Cotton Corporation of India (CCI) procuring 92 lakh bales under the price support program. CCI procurement is expected to exceed 100 lakh bales, providing comfortable price levels for spinning mills.
Vietnam's cotton imports and consumption are projected to reach a record 7.4 million bales in 2024-25, driven by record garment exports and increased foreign direct investment (FDI), according to the US Department of Agriculture.
Having signed 13 free trade agreements (FTAs) and six preferential trade pacts to boost exports, India has resumed negotiations with the UK for a comprehensive FTA. This comes after an eight-month gap, with Piyush Goyal, Commerce and Industry Minister and Jonathan Reynolds, UK Secretary of State, announcing the resumption of talks.
Negotiations, which began in January 2022, have completed 14 rounds. The FTA aims to boost trade and investment by reducing tariffs and non-tariff barriers, and to expand cooperation in technology, healthcare, and education.
In FY 2024, India's merchandise exports to the UK reached $12.9 billion. According to GTRI, the FTA's impact on increasing these exports may be limited, as over half of Indian goods already enter the UK with low or no tariffs. The UK's average tariff on Indian imports is 4.2 per cent. However, Indian exports worth $6.1 billion, including textiles, apparel, footwear, cars, and agricultural products, will benefit from duty reductions.
On the import side, India's merchandise imports from the UK stood at $8.4 billion in FY24. Approximately 91 per cent of these goods, worth $7.6 billion, face medium to high tariffs in India The UK seeks tariff reductions for these products.
With negotiations resumed, both countries aim to finalize an agreement that benefits trade and investment. The outcome will shape the future of India-UK economic relations.
Vietnam, Bangladesh challenges, a hype created vested interests: Giriraj Singh, Minister of Textiles
Downplaying the challenge posed by Bangladesh and Vietnam to India’s textile industry, Giriraj Singh, Union Textile Minister calls it a ‘hype’ created by a few vested interests.
The Modi Government aims to expand India’s textiles market from $176 billion to $350 billion by 2030, Singh informs.
In the 2025-26 Budget, the government has increased its allocation to the ministry by 19 per cent to Rs 5,272 crore. This will lead to job creation and exports from the textiles sector, he adds. Committed to reviving the jute sector, the government has also earmarked Rs 12,000 crore for the sector with efforts also on to organise craft village initiatives in India’s tourist destinations.
The government is also intensifying efforts to boost cotton productivity by adopting global best practices to increase the per-hectare yield, notes Singh. With an aim to adopt the Akola model, it has tasked the Cotton Corporation of India to identify one district in each state for conducting cotton productivity trials. It plans to implement this model to bridge the yield gap with global competitors. The government is targeting 1,000 kg per hectare in 11 major cotton-producing states, including Gujarat, Maharashtra, and Karnataka, by expanding the Akola Model, adds Singh.
In the technical textiles sector, the government has set an export target of $10 billion of technical textiles by 2030. It aims to start producing carbon fiber in the country by 2026, he adds.
The government is also promoting Make in India in the textiles sector to meet the growing domestic demand. It has set an ambitious target of $100 billion in exports for textile products by 2030, Singh.
Lastly, the government aims to increase jobs in the sector to 6 crore by 2030 from the current 4.5 crore. It plans to create 21 lakh jobs from the proposed seven PM-MITRA parks, Singh adds.
To mitigate the impact of potential reciprocal tariffs from the United States, India is pushing for increased textile exports through the proposed bilateral trade agreement (BTA).
Indian officials are prioritizing the BTA to shield key sectors, including textiles, agriculture, steel, and aluminum, from these potential tariffs. They aim to more than double bilateral trade with the US to $500 billion by 2030, a target agreed upon during Prime Minister Modi's recent US visit through this agreement.
India aims to negotiate the first phase of the BTA by fall 2025, with a focus on protecting its textile exports, which stood at $10.8 billion in 2024. The country is particularly concerned about significant tariffs differentials faced in the textile sector. It sees BTA as a crucial mechanism to protect Indian exports and ensure a mutually beneficial trade relationship with the US, India's top export destination.
Owned by Turkish entrepreneur Cafer Mahiroglu, Select Fashion plans to close 35 stores in the UK by mid-March. This would downsize the affordable fashion brand’s UK presence by half.
The retailer had initially planned to shut down 12 stores in locations like Southshields, Peterlee, Thornaby, Hartlepool Scarborough Hull Hessle Hull St Stephens, Ashington and Scunthorpe. But, it now plans to close two more stores in Bristol.
Struggling since the last few years, Select Fashion entered administration in 2019 as the affordable fashion brand faced difficult trading conditions. The retail chain failed to revive in the following years and entered a Company Voluntary Arrangement (CVA) last summer to restructure its debts.
Besides Select Fashion, New Look, Caffe Nero, Body Shop, and Jigsaw are also entering into CVAs. Brands like Ted Baker are also being forced to shut down their physical stores due to the 0 per cent economic growth registered by UK and a drastic rise in cost of living in the country.
India's cotton industry is set to receive a significant boost with the Indian Chamber of Food and Agriculture (ICFA) and the International Cotton Advisory Committee (ICAC) pledging support for the government's National Mission on Cotton. This Rs 500-crore initiative aims to enhance cotton productivity, sustainability, and global competitiveness.
During an ICFA-organized roundtable discussion, Dr MJ Khan, Founder announced this collaborative effort, emphasizing on the need to address critical challenges facing the sector. Eric B Trachtenberg, Executive Director, ICAC highlighted issues such as stagnant productivity, pest infestations, and climate vulnerability, stressing the importance of technological and policy interventions.
Trachtenberg warned, India risks becoming a major cotton importer due to persistent productivity issues and outdated hybrid seeds. Devastating impact of pests like the pink bollworm cause annual losses of Rs 3,900 crore, he pointed. Climate change further exacerbates the problem, threatening to destroy millions of cotton bales in key producing regions, he added.
To combat these challenges, experts advocate for stronger biotech interventions, including advancements in the Cotton Genome Initiative and the adoption of genetically modified organism (GMO) solutions. Speakers like Dr Satbir Singh Gosal and Dr M Prabhakar Rao emphasized the need for innovation, research, and improved breeding techniques.
Raghavan Sampath kumar, Executive Director, Federation of Seed Industry of India (FSII) called for enhanced collaboration between the textile-seed industry and suggested an International Year of Cotton to drive reforms. Dr YG Prasad, Director, ICAR-CICR emphasized on the importance of developing climate-resilient cotton varieties and integrated pest management strategies.
The roundtable concluded with key recommendations, including the introduction of advanced hybrid seeds and pest-resistant strains, bridging biotechnology research gaps through international partnerships, advocating for regulatory reforms in seed and biotech approvals, strengthening climate resilience, and enhancing export potential.
These discussions represent a crucial step towards revitalizing India's cotton sector, ensuring higher farmer incomes, and solidifying India's position as a global leader in cotton production. Shreyasi Agarwal, CEO, ICFA, underscored the importance of technology-driven solutions and multi-stakeholder collaboration in achieving these goals.
Confederation of Zimbabwe Industries (CZI) is urging industry leaders to increase value addition to cotton to reduce imports in the textile and clothing sector and boost the economy.
As outlined in the National Developmente Strategy 1 (NDSI) for re-industrializaiton, this will also help boost jobs and offer economic benefits, aligning with Zimbabwe's strategy of import substitution to strengthen its manufacturing sector, CZI says.
Cotton production in Zimbabwe declined from 360,000 metric tons in 2011 to just 13,000 metric tons in 2024. This shortage is forcing local industries to increase fabric imports.
In collaboration with farmers and the private sector, the government is trying to revitalize cotton production through increased farmer support and policy changes.
As per CZI, although the sector’s ginning capacity in the country is 750,000 metric tons, it operates at only 20 per cent, with most cotton exported as lint. Only 12,000 metric tons are processed locally, which is a significant loss for value addition and job creation, adds CZI.
Experts have expressed concern over the low level of lint processing, especially for an economy aiming for greater value addition.
Cotton production in Zimbabwe has declined since 2013 due to insufficient resources and farming support, leading to low yields. In 2015, production hit a low of 28,000 tons, prompting government intervention with the Presidential Input Scheme.
Last year, farmers produced only 13,000 tons of cotton, below the government's 42,000-ton projection, due to the El Niño drought.
In 2021, Zimbabwe's cotton to clothing exports grew by 132 per cent, earning $102.2 million. This growth was mainly driven by cotton lint and yarn exports, which increased to $85.7 million from $29.1 million the previous year.
This year, the country has increased the cotton planting area substantially expects a good harvest, states Professor Obert Jiri, Ministry of Agriculture.
The value of Bangladesh's apparel shipments to the EU rose by 4.86 per cent to $19.77 billion in 2024. The volume of the country’s apparel exports to the EU also increased by 10.18 per cent from the previous to 1,230.51 million kg.
However, the price per kilogram decline by 5 per cent, from $16.88 in 2023 to $16.07 in 2024.
EU's overall apparel imports increased in value by 1.53 per cent to $92.56 billion, while import volume grew by 8.98 per cent, as reported by Eurostat.
This resulted in a 6.83 per cent decline in average unit prices, affecting major suppliers like Bangladesh, according to Mohiuddin Rubel, Denim Expert.
China remained the top apparel exporter to the EU, followed by Bangladesh, Turkey, and India. All these countries, along with Vietnam and Cambodia, also saw price declines.
While Bangladesh maintained its position as a key EU supplier, the lower prices raise concerns about profitability amid global price reductions.
Falling prices make it harder to maintain profits, notes Rubel. Increased export volume and value were supported by producing higher-value garments, duty-free access, workplace safety, and the efforts of manufacturers and workers. These factors increased buyer confidence and strengthened Bangladesh's position in the export market, adds Rubel.
Although exports in 2024 were better than 2023, they were still below 2022 levels.
According to Rubel, while Bangladesh has shown resilience, it needs to shift strategies for future growth. The country can remain competitive and protect profit margins and global price declines by adding value to the products and diversifying markets, he adds.
After a period of global economic turbulence, Bangladesh's ready-made garment (RMG) sector is showing signs of resurgence, with exports to key markets like the EU and the US showing good growth in the first seven months of the 2024-25 fiscal. This rebound, however, raises questions about its sustainability and the underlying factors driving it.
Growing shipments a positive sign
The numbers are compelling. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data shows, apparel shipments to the EU grew 13.91 per cent year-on-year, reaching $11.81 billion. In the US, the largest single market, exports grew 16.45 per cent to $4.47 billion.
Table: Bangladesh RMG exports to key markets
|
Market |
July-January FY24-25 ($ bn) |
Growth (%) |
Share (%) |
|
EU |
11.81 |
13.91 |
50.15 |
|
US |
4.47 |
16.45 |
18.99 |
|
UK |
N/A |
4.55 |
10.83 |
|
Non-Traditional |
N/A |
6.42 |
N/A |
This growth has translated into higher market share for Bangladesh, with the EU now accounting for 50.15 per cent of total exports, up from 49.31 per cent in the same period last year. The US share also rose to 18.99 per cent from 18.27 per cent.
Growth triggers
Several factors have contributed to this positive trend. Firstly, the gradual recovery of global economy, particularly Europe and the US, has led to increased consumer demand. "Apparel consumption declined worldwide in the last fiscal year," says Mohiuddin Rubel, MD, Bangladesh Apparel Exchange. "Now these economies are doing better. And buyers are placing more orders."
Secondly, the ongoing trade tensions between the US and China have resulted in some buyers diverting orders to Bangladesh. "Some buyers have shifted orders from China because of the US-China tariff war," confirms Shams Mahmud, MD, Shasha Denims. This is proving beneficial for Bangladesh, positioning it as a viable alternative for global brands.
Also, improvements in internal factors, such as law and order, have also played a role. "Global brands that have outlets in Asia have increased sourcing from us," says Mahmud, highlighting the growing confidence in Bangladesh's stability. This growth is not without anxieties. "If a day is lost due to unrest or any other reason, we work at night or on Fridays. We are resilient," points out AKM Shaheed Reza, Chairman, Reza Group, highlighting the industry's ability to adapt.
Fragility of current business order
While the current growth is encouraging, its reliance on external factors like geopolitical tensions and fluctuating global demand raises concerns about its long-term sustainability. The industry's ability to capitalize on opportunities hinges on its capacity to enhance its own competitiveness and resilience. "The ongoing global trade tensions were reshaping the landscape, presenting opportunities that Bangladesh could capitalise on, provided the country possesses the necessary productive capacity," emphasizes Rubel.
Despite the positive trend, certain markets and product categories are struggling. Exports to Russia, South Korea, China, the UAE, and Malaysia have declined, indicating a need for targeted strategies to address these markets. Moreover, the industry faces several challenges. Ensuring a stable energy supply and managing worker payments during peak demand periods like Eid are crucial for maintaining momentum. "If we can pass this critical period, we will be able to achieve our export projections," cautions Mahmud.
Energy supply disruptions are a major concern, particularly for vertically integrated factories. "Gas shortages are a pressing concern, particularly for vertically integrated factories that rely on a steady supply," states Mahmud Hassan Khan Babu, MD, Rising Group. The Bangladesh Textile Mills Association President Showkat Aziz Russell also reports that most textile and spinning mills are running at 50 per cent capacity due to gas shortages, creating opportunities for competing nations like India, who have seen 40 per cent growth in exports to Bangladesh.
Another pressing concern is the need for product diversification and market expansion. While non-traditional markets like Japan and Australia are showing promise, further efforts are needed to tap new opportunities. "There should be a focus on non-traditional markets for product diversification and the development of new markets," advises Rubel. The positive exports growth to South Korea is a good example. "Bangladesh had been performing well in South Korea. We should explore the reasons," suggests Rubel.
Policy inconsistencies are another issue. "Some buyers place orders six months in advance. If the government introduces policies that hike utility bills or wages during that period, it could significantly impact businesses," explains Babu. Abdullah Hil Rakib, MD, Team Group, criticizes the lack of government support, urging a review of policies aligned with industry needs. What’s more, investment in backward linkages is vital for enhancing the RMG sector's competitiveness.
Challenges confronting Ashulia industrial zone
The Ashulia industrial zone faces numerous challenges, with buyers opting against placing orders due to law-and-order concerns and gas shortages. "Some buyers have already developed a map assessing the risks in this zone to relocate their orders away from the Ashulia zone," warns Mirza Shams Mahmud Shakti, CEO, SM Sourcing. While overall orders are strong, those catering to the fast fashion segment have only confirmed orders until April, highlighting potential volatility.
The closure of numerous factories due to financial crises, as reported by BGMEA, underscores the sector's vulnerability. BGMEA data reveals, over a hundred factories started operations in 2024, and the same number of factories closed operations due to the financial crisis.
Despite challenges, there is optimism for 2025. "Our projection for 2025 is about 15 per cent growth," says Sheikh HM Mustafiz, CEO, Cute Dress Industries. "We believe the interim government will take policy decisions to protect domestic industries," adds Russell. Industry leaders emphasize the potential to benefit from the China-US trade war, provided internal factors improve. However, the need for government support and policy reforms is crucial.
One year after the Antwerp Declaration, 400 business leaders gathered with European Commission President Ursula von der Leyen to discuss the Clean Industrial Deal. The initiative aims to strengthen Europe’s industrial base, but industry leaders stressed the need for immediate action to safeguard manufacturing.
Representing 200,000 textile companies and 1.3 million workers, Euratex supports the Clean Industrial Deal but warns that without swift measures, the European textile sector faces serious risks. High energy costs, complex regulations, and unfair competition from imports that bypass EU standards threaten its survival.
Euratex President Mario Jorge Machado highlighted these challenges, stating, “Our industry is in crisis. We need a level playing field, particularly against online platforms ignoring quality and sustainability rules.”
Addressing Climate Commissioner Hoekstra, Machado stressed that Europe accounts for less than 10 per cent of global textile carbon dioxide emissions but enforces strict sustainability laws while unsustainable imports dominate. “Without fair competition, we are outsourcing pollution while shutting down European factories,” he warned.
To safeguard the textile sector, Euratex emphasized four key priorities within the Clean Industrial Deal. Ensuring stable and competitively priced energy through an Affordable Energy Plan is crucial to retaining textile production and securing jobs. Public Procurement Reform should prioritize EU-made, sustainable textiles in government tenders, fostering demand for responsible production.
A dedicated Competitiveness Fund is essential to support SMEs by providing financial aid for innovation, workforce training, and technological advancements. Additionally, Fair Trade Partnerships must be reinforced to uphold environmental and social standards in global trade agreements, ensuring a level playing field for European manufacturers.
Machado also urged action to drive demand for sustainable textiles. “Sustainability cannot be a burden only on manufacturers. Consumers and public procurement must be incentivized to choose eco-friendly products,” he said.
Euratex calls on the European Commission and EU member states to act swiftly. “Factories are closing, and jobs are at stake,” Machado warned. “We need concrete measures now to secure the future of the European textile industry.”
