India has spent years waiting for the global sourcing map to tilt in its direction. Now, several of the pieces appear to be falling into place.
Brands are diversifying production away from China. India is expanding its network of free trade agreements. The country has a deep textile base, a large workforce and access to many of its own raw materials. And unlike some competing apparel-producing countries, India can support much of the journey from fiber through finished product domestically.
Yet having those advantages and converting them into substantially higher apparel exports are two different things.
That gap was at the center of a wide-ranging panel discussion at the Bharat Tex Expo in July featuring executives from some of India’s largest textile and apparel manufacturers, including Shahi Exports, Pearl Global, Gokaldas Exports and Arvind Limited. The discussion also included representatives from the Tiruppur Exporters’ Association and Cotton Council International.
Their message was less about India replacing China than about what India must do to become a larger, more reliable and more sophisticated sourcing destination in its own right. That will require manufacturers and policymakers to tackle shortcomings in scale, productivity, technology, garmenting capacity and infrastructure while building an industry capable of meeting buyers’ expectations for speed, flexibility, quality and compliance.
Scale Is More Than Factory Size
Shahi Exports is evidence of how far an Indian apparel company can grow. The company began more than 50 years ago as a small operation and today employs more than 100,000 people.
But Harish Ahuja, managing director and chairperson of Shahi Exports, said creating more companies of that size requires more than entrepreneurial ambition.
“India has got strong fundamentals,” he said, pointing to its textile base, entrepreneurship and workforce. The challenge is creating an environment in which companies can expand consistently over decades.
Shahi’s own development, he said, came through “consistency and constantly working on our core fundamental values and the basics.”
That long-term view becomes increasingly important as India sets ambitious export goals. Sivaramakrishnan Ganapathi, managing director of Gokaldas Exports, cautioned against assuming that new trade agreements will immediately produce enormous gains.
Preferential market access can certainly help. A tariff advantage of roughly 12 percent, he noted, is meaningful in a price-sensitive industry. But moving from roughly $16 billion in apparel exports toward a $40 billion target by 2030 would require annual growth far above the historical pace of some competing sourcing countries.
“We probably can look at a CAGR of 7, 8, 9%,” Ganapathi said. “And that’s a fair expectation so that would probably push that target to 2036 or 2037.”
Getting there will require more large manufacturers. India’s apparel sector historically developed around smaller businesses, but the companies gaining ground today tend to be those that have learned how to operate much larger factories, he said.
India Needs a New Garmenting Model
That issue is particularly acute in apparel manufacturing.
Kulin Lalbhai, vice chairman of Arvind Limited, argued that India already possesses considerable depth in spinning, weaving and processing. Arvind itself produces 300 million meters of fabric annually. There’s one thing missing.
“I think the challenge that has held India back at just 4% of global trade is the fact that we don’t have the missing link which is garmenting,” Lalbhai said.
Garment manufacturing remains highly labor intensive, with individual products requiring numerous stitching operations. At the same time, many factories operate in established manufacturing centers where labor availability, turnover, absenteeism and costs can make expansion difficult.
Continuing to add small factories in the same crowded industrial areas won’t produce the step change India needs, Lalbhai argued.
“The factory of the future is something which is more automated,” he said. “It will have half or less of the human manpower but it will have twice the efficiency.”
That doesn’t mean abandoning apparel’s role as a major employment generator. Rather, Lalbhai sees an opportunity to put factories closer to available workers, particularly in central and eastern India, while introducing automation and operating models that produce more output per employee.
Pearl Global is already testing that idea in Bihar.
Managing director Pallab Banerjee said the region has a sizable potential workforce, but government incentives should focus more closely on employment creation rather than simply rewarding the amount of capital invested.
Factories entering new regions also need to build skills and workplace culture among employees who may be entering formal manufacturing for the first time.
Diversification Is Becoming an Operating Capability
Pearl Global provides another potential roadmap for Indian suppliers: manufacturing across multiple countries.
The company operates in markets including India, Bangladesh, Vietnam, Indonesia and Guatemala. That footprint was originally intended to provide access to different product capabilities rather than serve as a geopolitical hedge, Banerjee said.
Then the pandemic demonstrated another advantage.
When factories in one market closed, Pearl could shift some work elsewhere. The experience pushed the company to reconsider how rigidly production lines were tied to individual product categories and how quickly workers could be retrained.
“We learned that the modular way of production—how quickly [we could] switch from knits to woven,” Banerjee said, became important to maintaining deliveries during the disruption.
That flexibility has taken on new relevance as tariffs and geopolitical risk increasingly affect sourcing decisions.
For apparel executives, diversification therefore isn’t simply a matter of maintaining a longer supplier list. The greater advantage comes when production networks have enough common capabilities to move materials, orders or capacity between locations when conditions change.
China Remains the Benchmark
The panelists repeatedly returned to China, but not because they expect India to recreate its manufacturing system.
China remains formidable precisely because its competitive advantage goes well beyond labor costs.
Lalbhai pointed to the country’s investments in robotics, automation and artificial intelligence, saying Arvind executives visit regularly to study what manufacturers there are doing.
“The level of automation that they have got, the level of AI sophistication they’ve got, it is stunning,” he said, noting that some manufacturers are working toward virtually labor-free “dark factory” concepts.
China also benefits from an integrated supply base that lowers costs and shortens lead times. Ganapathi noted that advantages extend from fiber, yarn and fabric through logistics and ports.
“So it’s the whole ecosystem which competes, not just the labor,” he said.
That is an important warning against viewing India’s lower wages as sufficient to win business. He noted that competitors can pay workers substantially more and remain successful because productivity per person is higher. Buyers ultimately pay for output, reliability and speed—not cheap labor in isolation.
Closing the Material Gap
India does have an advantage many apparel-exporting countries lack: much of its textile supply chain is already domestic.
Lalbhai estimated that approximately 90 percent of the value added in Indian textile and apparel exports takes place within the country. But one important hole remains.
India does not yet have sufficient capability in some of the advanced man-made fibers and yarns required for performance apparel and athleisure. Those categories increasingly depend on material science and sophisticated synthetic yarn technologies.
“The functionalities required for some of those products are pretty advanced and a lot of the material science is in the yarn,” Lalbhai said.
He expects some of that gap to close as international companies bring technology and expertise into India, potentially giving the country a more complete offering within the next several years.
Banerjee framed the challenge more broadly: Indian production needs to correspond more closely to what Western consumers actually buy rather than leaning too heavily on the country’s traditional cotton strengths.
“We have to align with the demand patterns of the West if we want those markets rather than just go with cotton,” he said.
Compliance Could Separate the Winners
Sustainability and social compliance are becoming another component of competitiveness.
Tiruppur provides one example. The manufacturing cluster includes thousands of interconnected businesses handling knitting, processing, embroidery and other production steps. KM Subramaniyam, president of the Tiruppur Exporters’ Association, said the cluster recycles approximately 95 percent of its water and has invested heavily in renewable energy and zero liquid discharge systems.
Those capabilities are becoming increasingly relevant as brands confront greater traceability and due diligence requirements.
Lalbhai contrasted Tiruppur’s export success with other large Indian textile clusters that have not invested as aggressively in quality control and compliance.
“If we don’t help our MSMEs get into the level of compliance for exports, it’s going to be a very big challenge,” he said, adding that India may need to replicate the Tiruppur model in numerous other manufacturing regions.
For buyers, that could eventually create a clearer divide between suppliers capable of supporting global compliance requirements and those competing largely on price.
The Opportunity Is There. Execution Comes Next.
Global sourcing diversification gives India an opportunity that manufacturers have discussed for years. But the panel made clear that geopolitical tailwinds and trade agreements won’t do the industry’s work for it.
India still needs more manufacturers operating at global scale. It needs garment factories designed around productivity rather than inexpensive labor alone. It needs new manufacturing centers closer to available workers, more advanced synthetic materials, stronger machinery and technology capabilities and greater investment in compliance throughout its supplier base.
It also needs patience.
As Shahi’s representative emphasized, buyers increasingly demand speed, flexibility, quality and higher levels of compliance. Building the capabilities—and the customer confidence—to deliver them consistently requires investment measured over decades rather than individual sourcing seasons.
India doesn’t need to become another China to capture a much larger share of apparel sourcing. It needs to turn the strengths it already has into an industrial system that can deliver consistently at scale.
“The answer lies in strengthening the ecosystem that enables companies to grow consistently over decades, because this cannot be built overnight. It needs consistency—decades of hard work,” Ahuja said.
