A cornerstone of the nation’s micro, small, and medium enterprise (MSME) landscape, India’s readymade garment (RMG) sector is bracing for a period of fiscal adjustment in FY 2027. According to recent projections from CRISIL Intelligence, revenue growth for the sector is expected to moderate to 4 per cent–6 per cent, down from the 6 per cent – 8 per cent expansion recorded in the previous fiscal year. While the industry’s total turnover remains robust, projected at approximately Rs 5.7 trillion, manufacturers are contending with significant margin compression, with operating profitability anticipated to contract by 100–150 basis points due to elevated input costs and softening domestic demand.
Supply chain volatility and input cost pressures
Smaller enterprises, which constitute nearly 80 per cent of India’s textile production capacity, face unique vulnerabilities in the current economic environment. Rising global prices for cotton and polyester—compounded by geopolitical disruptions in West Asia - are driving up production expenses. Unlike larger conglomerates, many MSMEs possess limited financial buffers and face challenges in passing these increased costs directly to price-sensitive domestic consumers. On the input front, manufacturers are struggling with higher international cotton benchmarks and rising domestic costs, including increased fertilizer prices and adjustments in the minimum support price (MSP) for raw cotton, which collectively squeeze the viability of traditional manufacturing clusters.
Export resilience amidst regional divergence
Despite domestic headwinds, the export outlook provides a vital counterbalance. The RMG export segment is anticipated to rebound with a 6 per cent–8 per cent growth rate, reaching Rs 1.49 trillion in FY 2027, aided by the implementation of free trade agreements with the United Kingdom and the European Union. Export-oriented hubs like Tiruppur and Bengaluru are expected to outpace domestic-focused clusters such as Kolkata, as they leverage improved market access and a depreciating rupee to bolster competitiveness. While global inflationary pressures persist, strategic investments in mega textile parks and ongoing government support schemes are seen as essential mechanisms to safeguard the medium-term resilience of these vital manufacturing units.
Backbone of Indian RMG industry
Indian textile MSMEs form the backbone of the domestic readymade garment (RMG) industry, managing nearly 80 per cent of total production. These enterprises primarily focus on spinning, weaving, and garmenting for both local and global markets. They currently face a strategic transition toward modernization and scale through government-led cluster and infrastructure initiatives.
