India Poised for Bigger Share in Global Apparel Trade as China’s Export Dominance Weakens: Nuvama
New Delhi: India’s textile and apparel industry could be entering one of its most significant growth phases in decades as global sourcing shifts away from China, according to a report by brokerage firm Nuvama Institutional Equities. Improving trade access, policy support, and changing global supply chains are creating favourable conditions for Indian manufacturers to expand their presence in international markets.
The global textile industry, estimated at nearly USD 1.6 trillion, remains a mature sector with annual growth of just 2.5–3.5%. Nuvama noted that India’s biggest opportunity lies not in rising global demand but in capturing export orders that are increasingly moving away from China.
Over the past decade, China’s share of US apparel imports has fallen by nearly half, opening up around 20% of the US market for alternative manufacturing hubs, including India, Bangladesh, Vietnam, Pakistan, and Indonesia.
According to the brokerage, India’s competitive position has improved as tariff structures across major apparel-producing nations have become more balanced.
Trade agreements are also expected to strengthen India’s export prospects. The recently implemented India-UK Comprehensive Economic and Trade Agreement (CETA) is expected to improve access to the UK market, while ongoing negotiations for an India-European Union Free Trade Agreement (FTA) could provide another major boost.
Nuvama highlighted that India’s share of the European Union’s apparel imports has remained stagnant at around 3% over the past decade, significantly below Bangladesh’s 16.7%, indicating considerable room for expansion if trade access improves.
The brokerage also pointed to improving demand conditions in the United States. US retail sales increased from USD 5.3 trillion in FY19 to USD 7.2 trillion in FY24, reflecting a 6% compound annual growth rate (CAGR). With retailers having normalised inventory levels after years of stock reduction, fresh ordering activity is expected to support textile exporters.
Despite the positive outlook, Nuvama cautioned that India continues to face structural challenges. While the country is one of the world’s largest cotton producers and spinning hubs, it remains heavily dependent on cotton even as global demand has shifted increasingly toward man-made fibres (MMF). The brokerage also noted that India’s garment industry has historically been constrained by relatively higher labour costs, limited trade advantages, and a fragmented manufacturing ecosystem.
To address these challenges, government initiatives such as PM MITRA parks aim to improve manufacturing integration and scale. Policy support for garments, MMF, and technical textiles is also expected to help India move further up the textile value chain and enhance its global competitiveness.
However, the report warned that several risks could affect the sector’s outlook, including changes in US tariff policies, delays in concluding the India-EU FTA, volatility in cotton prices, excess Chinese MMF capacity entering global markets through alternative routes, and execution risks related to large-scale capacity expansion projects.
Overall, Nuvama believes that shifting global supply chains, favourable policy measures, and expanding trade partnerships provide India with a rare opportunity to strengthen its position as a key global apparel sourcing destination.
