India’s textile exports are expected to rise as increasing free trade agreements (FTAs) and a recovery in global demand create new opportunities amid the declining share of Chinese apparel exports, according to a report by Motilal Oswal.
The report said global clothing retailers and brands are becoming more optimistic about growth prospects as inventories stabilise, sell-through patterns improve, and discretionary demand in the US and Europe recovers.
“This is leading to improved sourcing visibility and healthier ordering cycles, which is positive for Indian textile exporters through stronger order flows, better capacity utilisation, and improved margin visibility,” the report said.
The recently signed India-UK Free Trade Agreement (FTA), which is expected to significantly enhance the competitiveness of Indian textile and clothing exports in the UK market, is a key growth driver for the industry.
The report highlighted that India currently accounts for roughly 6 percent of the UK’s more than USD 20 billion garment import market, due to the existing 8–12 percent import duty disadvantage compared with countries such as Bangladesh, Turkey, and Cambodia, which have duty-free access.
“The proposed FTA is expected to remove import duties, significantly improving India’s competitiveness in the UK market and aligning it with key sourcing nations,” the report noted.
“China’s declining apparel export share from 37 percent (CY14) to 29 percent (CY24) is creating a significant opportunity for India, which is well-positioned to capture market share through recent trade agreements, PLI scheme support, and expanding production capacity,” it said.
According to the Motilal Oswal report, the deal could help Indian exporters increase their market share in the UK when combined with the ongoing China+1 sourcing strategy and rising labour costs in China.
Overall, the continued decline in Chinese clothing shipments to the US is providing Indian exporters with a major opportunity to expand their international market share.
Moreover, China’s share of US apparel imports fell to 22 percent in 2023 from 37 percent in 2019, while its share of global garment exports declined to 29 percent in CY24 from 37 percent in CY14, the report added.
