India’s textile sector, the country’s second-largest employer after agriculture, is struggling to sustain momentum amid an expanding web of trade agreements, escalating labour costs, and declining factory efficiency.
Although it ranks as the world’s leading cotton producer and the second-largest textile and garment manufacturer, India commands merely 4% of the global textile market.
A recent white paper, titled ‘The Missing Stitch: India’s Unfinished Garment Export Story’, unveiled at Bharat Tex 2026, spotlighted the sector’s persistent pattern of exporting fabric without capturing further value.
The paper attributed the industry’s weak financial performance to elevated labour costs, tangled trade-agreement and duty structures, and the disjointed operations between fabric producers and garment manufacturers.
It further noted that fragmented information flows and inconsistent quality standards trigger value erosion throughout the supply chain, driving up costs while constraining sales.
A particularly telling finding concerned dismal factory efficiency, which has undermined productivity across the sector.
The report found that Indian factories typically reach only 58% to 70% of their targeted sewing output, while fulfilling merely 60% to 80% of orders on time and in full (OTIF) — falling well short of the 90%-plus reliability that major global apparel retailers demand.
To compensate for delivery shortfalls, manufacturers frequently air-freight as much as 20% of shipments instead of relying on sea transport, a far costlier alternative that inflates expenses and squeezes profit margins.
Conducted by Vector Consulting Group, the study found that 35% to 45% of fabric manufactured by Indian mills leaves the country without any downstream processing — representing a substantial forfeited opportunity for value creation.
To tackle these structural issues, the white paper advocates a production ecosystem framework wherein fabric manufacturers take the lead in coordinating planning, information sharing, quality control, inventory management, and commercial decisions alongside partner garment producers.
By transforming independent enterprises into a unified production network, the report projects sewing efficiency climbing to 80–85%, potentially boosting factory operating profits by 80% to 200%.
Such productivity gains, it estimates, could lift India’s garment exports from $16 billion to a range of $19–23 billion, unlocking an incremental $3–7 billion from capacity already in place.
Image courtesy: Reuters
