Indian Textile Industry in 2025: Key Learnings and the Road Ahead

January 24, 2026 | By Textile Sphere India

In this thought leadership piece, Rajeev Gupta, Joint Managing Director, RSWM Limited, analyses how 2025 reshaped India’s textile industry, highlighting export resilience, fibre diversification, and policy support, while outlining the strategic priorities that will define competitiveness and sustainable growth in 2026 and beyond.

The year 2025 marked a phase of recalibration for the Indian textile and apparel industry. While global demand remained uneven and trade conditions became more complex, the sector demonstrated resilience rooted in strong domestic fundamentals, export diversity, and sustained policy support. More importantly, 2025 offered key learnings on what will define competitiveness in the years ahead, which can be categorized in three broad terms, namely, diversification, value-chain alignment, and disciplined execution.

Textiles continue to be one of India’s most important industrial pillars, contributing about 2.3% to GDP, over 12% to industrial production, and providing direct employment to over 45 million people.  In 2025, domestic consumption remained steady, while exports continued to anchor scale and global relevance despite mounting external pressures.

Resilient Exports amidst Headwinds
Exports remained central to industry performance in FY25. According to the Department of Commerce, India’s textile and apparel exports stood at approximately USD 37.8 billion, with the US, EU, and UK together accounting for about USD 20.7 billion.  These markets remained critical, but they also exposed exporters to tariff-driven risks and policy uncertainty.

India is the 6th largest textile exporter in the world, accounting for 3.9% of global trade. The textile exports to over 111 countries grew by nearly 10% year-on-year during April–September 2025, reflecting India’s expanding market footprint even amid global headwinds.  However, higher duties, particularly in the United States, which accounts for nearly 29% of India’s textile exports, have impacted competitiveness across apparel, home textiles, and man-made fibre segments. As a result, industry behaviour shifted. Exporters became more cautious, prioritizing margin protection, inventory discipline, and tighter specification control over volume-led growth. We have entered a phase that shows that future export growth will depend less on scale alone and more on precision, compliance readiness, and the ability to manage external shocks.

Fibre Balance Emerges as a Strategic Lesson
One of the most important learnings of 2025 was the need for fibre balance. Cotton continued to play a foundational role in India’s textile value chain. India remains among the world’s largest cotton-producing and cotton-cultivating countries, supporting a deeply integrated ecosystem spanning spinning, weaving, and processing. However, global consumption patterns increasingly favour man-made fibres and blends for their performance characteristics and durability. Official industry assessments note that man-made fibre–based products account for a majority share of global fibre consumption, making diversification beyond cotton essential for long-term export competitiveness. During 2025, Indian manufacturers increasingly aligned their product mix to reflect this shift, moving toward fibre neutrality rather than reliance on any single raw material.

Policy Support and Trade Preparedness
Government policy played a stabilising role in 2025. The Production Linked Incentive (PLI) Scheme for Textiles, with an approved outlay of ₹10,683 crore, continued to drive investment into MMF apparel, fabrics, and technical textiles. 

The progress under the PM MITRA Parks Scheme, with seven mega parks approved across key textile states, reinforced long-term commitment toward scale, QCO (Quality Control Orders) reform, GST rationalization, FTAs, National Technical Textile mission (NTTM), infrastructure efficiency, and integrated manufacturing aligned with the 5F vision, Farm to Fibre to Factory to Fashion to Foreign.  Also, initiatives such as Kasturi Cotton Bharat further addressed quality, branding, and traceability challenges in Indian cotton.