Textile sector needs urgent reforms to maintain global competitiveness: Niti Aayog | Mint

New Delhi: The domestic textile sector needs swift reforms in supply chain integration, cost efficiency, and sustainability compliance to sustain its competitive advantage, the government think tank Niti Aayog said in a report on Friday.

In its report titled Trade Watch July-September (Q2) FY25, which evaluates the competitiveness of the textile sector, Niti Aayog highlighted the industry’s critical role in the nation’s industrial output, employment and exports.

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The sector accounted for 5% of total exports, valued at $34.2 billion in 2023.

However, despite being one of the oldest industries, its share in global trade remains modest at 4%, positioning India as the sixth-largest exporter of textiles and apparel.

“India holds strong competitiveness in natural fibre-based textiles, particularly cotton and carpets, but faces challenges in apparel exports and other technical textiles, where Bangladesh and Vietnam have outpaced it,” the report said.

It emphasised that India has a moderate foothold in man-made textiles, but lags in high-value technical textiles, a segment dominated by China, Germany and South Korea.

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“Although India’s participation in global textile value chains has grown, the sector must undergo urgent reforms in supply chain integration, cost efficiency, and sustainability compliance to stay competitive in the global market,” the report added.

India’s textile exports stood at $35.94 billion during FY24, reporting a 1.95% annual decline, according to data from the ministry of commerce and industry.

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In comparison, Bangladesh’s garment exports reached $44.47 billion in FY24, while Vietnam’s exports too were approximately $44 billion.

India’s textile and apparel exports have remained at approximately $40 billion for the past six years, growing at just 0.8% annually, far below the global growth rate of 3.5%.

“While the country exports 840 textile products, more than 52% of its exports come from just 134 items, in which India holds a global export share of over 10%. This indicates strong competitiveness in selected segments, but also the absence of diversification,” the report said.

“China dominates global textile exports, leading in man-made textiles (50%), technical textiles, and traditional segments such as cotton and carpets. India’s dependence on China for synthetic fibre and technical textile raw materials presents a challenge for expanding exports,” it added.

Niti Aayog’s latest Trade Watch also highlighted that growing geopolitical fragmentation, particularly between the US and China, is reshaping global trade dynamics as countries increasingly prioritize trade within their geopolitical blocs.

“While this shift disrupts traditional trade patterns, it creates new opportunities for emerging economies like India, particularly in sectors such as pharmaceuticals, IT services and manufacturing,” it said.

“However, increasing competition from Vietnam, Mexico, and Poland, along with stringent labour and environmental regulations, necessitates that India enhances its ease of doing business, trade infrastructure and regulatory alignment to capitalize on these shifts effectively,” it added.

Niti Ayog said it will present a detailed analysis of the Reciprocal Tariff Plan’s impact on India in its next edition of Trade Watch.

“India’s trade landscape continues to evolve, driven by strategic policy reforms, resilient industrial growth and expanding global partnerships,” said B.V.R Subrahmanyam, chief executive officer at Niti Ayog.

“Despite its strong presence in natural fibre-based textiles, India’s share in the global textile trade remains modest, highlighting the need for innovation, modernization and policy-driven competitiveness,” he added.