Textiles exports a silver lining as India’s trade deficit widens

Rising from $17.05 billion in FY21 (April-November 2020) to $23.30 billion in the last eight months of the current fiscal year, this growth underscores the sector’s ability to adapt and thrive despite global economic uncertainties and shifting trade dynamics, according to a commerce ministry official.

Against the backdrop of increasing import bills for crude oil and gold, the steady growth in textile exports has played a vital role in mitigating India’s trade deficit. India’s trade deficit in November surged to a record high of $37.84 billion, primarily driven by the rise in gold imports and net oil and gas imports.

A detailed analysis of export data during the corresponding months of the past five years reveals a robust expansion in key markets, including Europe, the UK, the US, and African nations. This surge in demand highlights India’s growing prominence as a global textile hub, catering to a diverse range of consumer needs across regions, said the official cited above.

Even so, Rahul Mehta, chief mentor of the Clothing Manufacturing Association of India, said a growth of 36% over a period of 5 years was not a respectable figure, considering the low base during the covid-19 period. “In the readymade garment sector, we have not seen significant growth, except in the last 5-6 months of this fiscal, where it has shown a growth of 8-10%,” Mehta said.

The rising textile exports, however, have to an extent helped contain India’s widening trade deficit because of increasing oil and gold imports.

In November 2023, gold imports reached $3.44 billion, contributing to a record $14.86 billion in imports for November 2024, driven by festival and wedding demand. 

Cumulatively, imports from April to November FY24 rose 49% to $49 billion, up from $32.93 billion in the previous year. India’s net oil and gas imports for April-October stood at $79.3 billion, up from $69.2 billion last year, according to provisional data from the Petroleum Planning and Analysis Cell.

Robust expansion

India’s textile exports to Europe grew from $4.56 billion in FY21 (April-November) to $6.36 billion in FY25 (April-November), marking a remarkable growth of 39.47%, the commerce ministry data showed. European markets have shown a strong preference for Indian textiles, driven by the sector’s emphasis on quality, competitive pricing, and an expanded product range.

The UK stands out as another success story for Indian textiles, with exports climbing from $946.47 million in FY21 to $1.31 billion in FY25, reflecting a growth of over 38%, the data showed. This growth signals strengthening trade ties and the rising appeal of Indian textiles in the UK, particularly in segments such as high-fashion fabrics and home furnishings.

Latin American countries including Suriname, Brazil, Argentina, Peru, and Chile, have also emerged as promising destinations for Indian textiles. Exports to the region grew from $602.76 million in FY21 to $969.59 million in FY25, representing a growth of over 60%. This expansion showcases India’s strategic efforts to penetrate new markets and diversify its export base.

The African region, with its vast and varied consumer base, has seen a steady rise in textile imports from India. Countries such as South Africa, Madagascar, Zambia, Ivory Coast, Senegal, Niger, and Nigeria collectively imported $1.13 billion worth of textiles in FY21, a figure that grew to $1.29 billion in FY25. The sector’s focus on offering affordable yet high-quality products has been instrumental in driving this growth.

NAFTA surge

Under the North American Free Trade Agreement (NAFTA) bloc, which includes the US, Canada, and Mexico, textile exports surged to $7.62 billion in FY25 from $5.11 billion in FY21. The US alone accounted for $7 billion in FY25, up from $4.77 billion in FY21, reaffirming its status as India’s largest textile export market. This growth is attributed to strong demand for premium Indian products, coupled with a revival in consumer spending in North America post-pandemic.

Industry experts attribute this growth trajectory to a combination of factors, including government-led policy interventions, trade agreements, and the sector’s adoption of cutting-edge technologies. Investments in sustainable practices and innovation have further enhanced India’s competitiveness in global markets.

“With India’s inherent strengths and a strong supportive policy framework from the Centre and States, India is all poised to reap its benefits. With end-to-end value chain capability, a strong raw material base, and factories focusing on sustainable and responsible business practices, India will surely see substantial growth in the times to come,” said Sudhir Sekhri, chairman, Apparel Export Promotion Council (AEPC).

Raja M. Shanmugam, former president of the Tirupur Exporters’ Association, said India’s textiles industry has a high potential for growth and needs greater policy attention.

“India is fortunate to have three strong factors supporting the industry: manpower, cotton production, and the position in manmade fibers. All these three are positive factors prevailing in India,” Shanmugam said.

“However, despite these advantages, we have not succeeded in securing a respectable share of the global market in end products so far. There is a need for policymakers to give more thrust to this sector. Textiles are being kept at a low priority, at the ministry level. This is a job creator for a populous country like India.”