As the fashion industry looks to potentially rejigger supply chains, India is on everyone’s lips. And not for the first time. The southeast Asian country enjoys a wave of positive chatter every few years, as the media and industry alike extol the many advantages India represents for the textile and apparel markets. In the past, the conversation ends up dying down with not as much to show for it as many would have expected.
This time could be different.
It seems the country is on something of an upswing. According to latest Fashion Industry Benchmarking Study from the United States Fashion Industry Association (USFIA), 2024 was the first time more brands sourced from India than Bangladesh in the history of the survey. Further, nearly 60 percent plan to expand sourcing from the country through 2026.
But Inda still has a ways to go.
While the country is firmly in the sourcing mix, it has yet to become a major supplier for these companies. Almost half (48 percent) reported doing 10 percent or less of their total sourcing there. Another 44 percent placed between 11-33 percent of their sourcing in India. Meanwhile, 63 percent and 58 percent of companies place the same amount of goods in Vietnam and Bangladesh, respectively.
The question is, can the country close the gap?
“India has all of the ingredients,” said Achim Berg, founder and managing director of the think tank FashionSIGHTS. “When we wrote the state of the industry report [at McKinsey & Company], in those eight years, we had ‘the breakthrough of India’ at least twice, and it didn’t break through as we thought.”
On paper, India checks off many of sourcing executives’ main requirements. The country is rich in cotton, has a long history in textiles and has a robust labor force. But somehow, the math has never added up to more than the sum of its parts—at least in the recent past.
During the quota era, India was a serious rival to China, but when quotas fell away, that nation—now newly a member of the WTO—capitalized on the opportunity in a way India did not, according to Nitin Gupta, CEO and founder of Maavi Global, a sourcing advisory for brands learning to navigate the U.S. market.
“China was able to open up its market to America significantly, and as kind of a negotiating tool, what they said was, ‘We are giving you the market, but we need the manufacturing,’” Gupta said. “India has never done that.”
This time, Gupta has added his voice to those lobbing the Indian government to leverage its robust economy. The Financial Times reported in May that India “remains the fastest-growing large country” and it has the potential of rivalling Japan’s economy by end of year. “There are a lot of new consumers coming up. And I am pushing the policymakers to not only open up the market for all these brands, but also to push them back to say, ‘Okay, listen now I need you to buy 5 percent or 10 percent of your product from India.’”
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Weighing the advantages
But to truly realize its full potential, India has to overcome its weaknesses. And it starts with raw materials.
“They don’t have a large synthetic base yet,” Robert Antoshak, vice president, global strategic sourcing and development, at Grey Matter Concepts sourcing company, currently building a new factory in Tirupur. “In large part because the few fiber companies that are in the country have over the years, been able to convince the government to maintain high tariffs and [other measures] to make it difficult to invest in India for synthetic production.”
For now, he said China’s “endless supply” of man-made fibers will continue to be a competitive advantage.
For example, throughout most of 2024, only 14 percent of the clothing shipped to the U.S. from India was comprised of polyester, according to a report from Dr. Sheng Lu, professor in the fashion & apparel studies department at the University of Delaware. Meanwhile, polyester garments represented 46 percent of U.S. apparel imports from Bangladesh and 55 percent from Vietnam for the first 10 months of 2024.
“China was able to open up its market to America significantly, and they said, ‘We are giving you the market, but we need the manufacturing.’ India has never done that.”
—Nitin Gupta, CEO and founder of Maavi Global
The country is attempting to close the gap. A central pillar in India’s Production Linked Incentive (PLI) Scheme for Textiles is promoting MMF apparel and fabrics, with an emphasis on technical textiles.
At the same time, India has an edge on China when it comes to cotton. For the last three years, cotton out of China has been under a microscope as brands and retailers doing business in the U.S. have attempted to dodge any association with Uyghur cotton. To date, the Uyghur Forced Labor Protection Act has cost the textile and apparel industry more than $91 million. Meanwhile, multiple laws in the EU, both proposed and in force, feature penalties for human rights violations.
“In India, in many cases, you use non-China cotton, so that eases a lot of pressure on cotton traceability,” said Paul Walsh, CEO of Newtimes Development apparel sourcing solutions agency.
Walsh is bullish on India, which he said is in “accelerated growth mode” right now, fueled by abundant raw materials and fully vertical fabric mills. “India has a very similar flexibility compared to China in terms of MOQs and smaller orders. They also have an abundance of raw materials and fabric mills so that part of fully vertical so you have the speed element,” he said.
When asked to rank countries that have the lowest minimum order quantity requirements, India scored a 3.0, putting it on the heels of China’s 3.5 out of 5 in the USFIA survey.
The country also scored well on sourcing cost competitiveness. “There’s a lot of untapped labor pool in inner India,” he said. In fact, with more than 607 million people, India’s labor force is second only to China.
But the size of the labor pool is not the only consideration. “The country’s literacy rate has improved from what it was two decades ago,” said Jawed Bhinder, global sourcing & new business development, M5 Groupe. “So mostly fresh undergraduates or college dropouts are not willing to learn any vocation skills. They’re rather work as a security person at the mall, do food delivery or be an influencer—something that’s more comfortable.”
“Another thing that has held back India traditionally has been a weak cut and sew sector. Cotton rich home textiles is their strength. Clothing, not so much,” Antoshak said, adding particularly when it comes to western-style garments.
While that may have historically been true, Bhinder said the country has developed a few key bright spots. “We are very strong in women’s wear, children’s clothes and men’s casual shirts. These three product categories are mostly India’s forte in apparel productions and apparel exports,” Bhinder said.
Walsh is optimistic that India can continue to build on its existing capabilities. “India has a lot of very unique strengths, and those unique strengths are also expanding. For example, over the last 12 to 18, months, we started to see sweaters emerge as a category, which was never thought about for India,” he said.
Bringing it all together
Figuring out where to make all of these goods, though could be a challenge.
India boasts 18,113 factories in its textile industry, according to the country’s Ministry of Statistics and Programme Implementation. The challenge is the landscape is fractured with capabilities and price points varying by region across the north and south. Plus, many of these resources are focused solely or on the large domestic market.
Tirupur, the largest textile producing city in India, focuses on circular knits, including sleepwear, T-shirts, sweatshirts and joggers that can hit the price point for off-price and club chains. Meanwhile Delhi and Bombay are expert in dresses and women’s shirts, with Bombay more mid-tier to upscale. And Ludhiana, which mostly produces for domestic consumption.
“The Indian industry is massive, but it’s really disorganized. It’s scattered all over the country and it’s really deep with organizations, very bureaucratic,” said Antoshak.
Beyond the sprawl, Gupta said the industry wasn’t evolving and fostering new production facilities. For this reason, he said the country was not able to capitalize on the tariffs on Chinese goods from Trump’s first administration. “A lot of the infrastructure in India had been the old factories, which are still operating. So, if a sourcing director of a brand were given a list of factories it would be the same 20 names that have been round since the quota era,” he said. “The government is now serious about it, and has given incentives to set up industrial parks all across India, not just in the core manufacturing old time areas.”
To raise awareness of these new resources, India has launched Bharat Tex, a trade show that has quickly grown into a massive fair, showcasing all the country’s new factories, new vendors and new product categories.
“Rather than being worried, more people are seeing opportunity,”
—Chandrima Chatterjee, The Confederation of Indian Textile Industry
For this reason, Chandrima Chatterjee, secretary general of the Confederation of Indian Textile Industry (CITI), said India is prepared to capitalize on Trump tariffs 2.0. Though the differential between China’s 30 percent rate and India’s at 26 percent, doesn’t provide the opportunity it did for the few weeks when goods from China were tariffed at 145 percent, the country still sees possibilities as sourcing executives weigh the relative risks. Plus, the country remains at an advantage when compared to Bangladesh (37 percent), Vietnam (46 percent) and Cambodia (49 percent), which in some cases could be enough to compensate for productivity differentials or other areas the country is relatively weaker in.
Plus, there’s always hope for a free trade agreement (FTA) with the U.S. that would change the playing field once again. It’s what every nation on the U.S. president’s Liberation Day list is hoping for. “If you have a meaningful deal in place with some favorable terms that is solid enough that fashion brands [and] suppliers think they can rely on, those markets will have a competitive advantage over other markets that have less favorable terms and a higher level of insecurity,” Berg said.
For now though, that’s a big if for India. Despite being the first to step up for talks in February and fostering ongoing bilateral negotiations since the tariffs were announced, the country remains on a knife’s edge. Particularly when Trump makes statements like he did in May that Apple should halt iPhone production in India and move it to the U.S. Whether that comment was more pointedly directed at the tech company or India, remains to be seen.
“Rather than being worried, more people are seeing opportunity,” Chatterjee said. “Many people are trying to see if they can expand more into the U.S., especially in categories that China [was in before].”
In particular, she said, India is a good alternative in entry to medium price point knits. Opportunity could also exist in premium and luxury, given that 45 percent of India’s export to the U.S. market were in those categories for much of 2024, according to Lu. Compare that to 50 percent for China and contrasted to only 13 percent for Bangladesh.
Beyond the U.S., her members are looking for alternate markets, which she hopes will be facilitated by more FTAs like the long-anticipated agreement with the U.K., particularly with both the EU.
Chatterjee would also like to see more government support, particularly because foreign direct investment is rare in the country as compared to places like Vietnam, which have accelerated as a result of Chinese investment. “Overall, FDI in the sector has not been too much in the past. We have a PLI scheme now, under which the investments took off a bit, but not to [a great] extent, mainly because I think our investment promotion schemes also need to be a little more attractive,” she said.
“India has been sitting at the cusp of opportunity for many, many years. It’s just that the plate has been offered to them. They did not accept the plate,” Gupta said. “But I think the policy makers, the government, the manufacturers today are much more gung-ho about that.”
