The Indian rupee’s historic slide past the ₹90.43 per dollar mark in late 2025 has forced a fundamental recalibration across India’s $179 billion textile value chain. While a "weak" rupee is often celebrated as a windfall for exporters, the reality is a complex "double-edged thread." For an industry that employs 45 million people, the currency's depreciation is acting as both a catalyst for global price competitiveness and a crushing weight on the cost of essential imported inputs. As global supply chains shift, the question for Indian manufacturers has evolved from whether the falling rupee is a "pain" to how quickly they can transform this volatility into a strategic "opportunity."

The Imported Inflation Squeeze: From fiber to chemicals

The immediate impact of the rupee’s descent is visible in the rising cost of production. India remains significantly dependent on imports for high-end synthetic raw materials and specialty chemicals. For instance, the Man-Made Fiber (MMF) segment—a key focus for future growth—relies on imported Mono Ethylene Glycol (MEG) to supplement domestic deficits. With the dollar strengthening, the cost of these inputs has surged by nearly 6–8% in just the last quarter.

Beyond raw fibers, the "hidden" cost of the falling rupee lies in processing. India imports approximately 70–80% of its high-end specialty dyes and functional chemicals used for performance wear and fast-fashion finishes. Every cent the rupee loses adds directly to the processing bill. When manufacturers combine expensive dollar-denominated chemicals with the 25% spike in domestic logistics costs, the currency-led export advantage starts to evaporate before the garment even leaves the factory.

The machinery gap and the cost of modernization

A critical bottleneck in India’s quest to rival China and Vietnam is the reliance on imported technology. To meet the global demand for high-speed, automated production, Indian mills import advanced shuttleless looms, knitting machines, and digital printing equipment primarily from Germany, Italy, and Japan. As the rupee tests the ₹91 level, the capital expenditure (CAPEX) for modernization has bloated. A machine that cost ₹1 crore in early 2024 now requires an additional ₹8–10 lakh due to currency fluctuations alone. This "modernization tax" is particularly heavy on MSMEs who are trying to scale up under the government's Production Linked Incentive (PLI) scheme but find their dollar-denominated machinery loans increasingly difficult to service.

Supply Chain Impact: The "Fibre-to-Finished" cost matrix

The following table illustrates how the rupee's depreciation filters through different stages of the textile supply chain as of late 2025:

Export resilience in a protectionist era

Despite the input cost hurdles, the "opportunity tomorrow" is beginning to manifest in export volumes. In the first half of FY26 (April–September 2025), India’s textile and apparel exports showed a gritty resilience, growing to $18.23 billion. While apparel exports to the U.S. have faced headwinds due to a 50% "reciprocal tariff" wall, Indian exporters have successfully adjusted their focus toward the EU, UAE, and Australia. The weakened rupee has allowed Indian firms to offer more competitive pricing in these markets, helping to offset the higher cost of imported machinery and raw materials. In clusters like Tirupur, a 11.4% growth in exports during the middle of 2025 suggests that the industry is learning to navigate its way out of the currency crisis.

Strategic Hedging: The MSME survival blueprint

To survive the current volatility, manufacturers are moving away from "waiting for the dip" and toward aggressive financial hedging and domestic substitution. The industry is seeing a surge in forward contracts to lock in dollar rates for machinery imports, while larger mills are increasing their "in-house" chemical blending to reduce reliance on imported finished dyes. This shift represents a move toward a more sophisticated, risk-aware ecosystem that prioritizes long-term stability over short-term currency gains.

The Indian textile & apparel landscape

The Indian textile and apparel industry is a cornerstone of the national economy, currently valued at approximately $179 billion with a target to reach $350 billion by 2030. The landscape is characterized by its "farm-to-fashion" integration, where India stands as the world’s second-largest producer of cotton and a top-six exporter of MMF textiles. Key markets include the U.S., which accounts for nearly 29% of exports, alongside a rapidly growing domestic market valued at $142 billion. Growth plans are currently anchored by the PM MITRA scheme, which is establishing seven mega-integrated textile parks to centralize the supply chain and reduce logistics costs. Financially, the sector is in a phase of "cautious expansion," with the government extending the PLI scheme application deadline to December 31, 2025, to encourage fresh investment in technical textiles and MMF. Historically, the industry has transitioned from a traditional handloom-heavy base to a global manufacturing hub, though it currently faces the challenge of diversifying away from its 70% cotton-dependent export basket toward the more globally traded synthetic fiber segments.