What's Happening?
India is facing challenges in scaling its apparel production and exports compared to neighboring countries like Bangladesh, Vietnam, and China. Despite efforts to boost its market share, India's apparel exports have stagnated at $15.7 billion in 2025,
while Bangladesh and Vietnam have significantly increased their exports. The Indian Council for Research on International Economic Relations (ICRIER) highlights factors contributing to the success of these countries, such as access to capital, economies of scale, and favorable trade agreements. India's fragmented production clusters and high financial costs are identified as barriers to growth, necessitating focused attention on export-credit architecture and integrated manufacturing ecosystems.
Why It's Important?
The stagnation in India's apparel exports has implications for its economic growth and employment opportunities. As global apparel markets shift, India risks losing competitive advantage to countries with more efficient production systems and favorable trade conditions. Addressing these challenges is crucial for India to enhance its export capabilities and attract foreign investment. The apparel sector is a significant contributor to job creation, and improving its competitiveness could lead to increased employment and economic development. The report underscores the need for strategic policy interventions to support the industry and capitalize on global sourcing opportunities.
What's Next?
India's government and industry leaders are expected to focus on developing integrated manufacturing hubs and reducing financial costs to improve competitiveness. The establishment of PM Mitra industrial parks is anticipated to support this effort, although timely implementation is critical. As India negotiates trade agreements with key markets, it aims to create a more level playing field for its manufacturers. The apparel sector's growth will depend on addressing systemic issues and leveraging trade partnerships to expand its global market share.
