Threads of Trade: India's Textile and Garment Exports

Reference library · 984 words

Textiles are the oldest thing India sells to the world and still one of the largest employers in the country after agriculture. Roman writers complained about silver draining east for Indian cloth. Bengal muslin was so fine that European buyers gave it names like woven air. For most of recorded history, India was the workshop that clothed a large part of Asia, Africa and the Middle East. That primacy was lost during the nineteenth century and has never been fully regained, and the reasons for both the loss and the partial recovery explain most of what the industry looks like today.

The industry is not one business but a chain of them, and India is unusual in having domestic capacity at every link. Cotton is grown mainly in Gujarat, Maharashtra, Telangana and Punjab, and India is among the world's largest producers, a position consolidated after genetically modified Bt cotton hybrids were approved for commercial planting in 2002. Ginning, spinning, weaving, knitting, dyeing, printing, cutting and stitching each have their own geography. Coimbatore and its surrounds spin yarn. Tiruppur, a town in western Tamil Nadu, is the country's knitwear capital, exporting cotton T shirts and innerwear on a scale that reshaped the local economy and its water table. Surat dominates man made fibre fabrics and saris. Ludhiana makes hosiery and woollens. Panipat produces home textiles and recycled yarn. Bhilwara in Rajasthan makes suiting fabric. Karur exports made ups such as kitchen linen. Bengaluru, the Delhi region and Mumbai host garment factories serving European and American brands.

How primacy was lost

The collapse of the handloom export trade in the nineteenth century is one of the most argued over episodes in economic history. The mechanical facts are not in dispute: British mills in Lancashire, using steam power and later cheap Indian raw cotton, undercut Indian handloom cloth in price, while tariff policy under colonial rule protected British goods in India and taxed Indian goods entering Britain. What is contested is how much of the decline was policy and how much was the ordinary consequence of mechanisation, which destroyed handloom weaving in Britain too. Indian nationalists drew a clear moral from it: the Swadeshi movement from 1905 made boycotting foreign cloth a political act, and Mahatma Gandhi turned the spinning wheel into the emblem of self rule, with khadi as both economic programme and discipline. The charkha still sits at the centre of the Indian flag's design lineage.

After independence, policy tried to protect employment rather than build scale. Handlooms were reserved for specific product categories, and from the 1960s garment manufacture was largely reserved for the small scale sector, meaning firms above a modest investment ceiling could not enter. The intention was to spread work across many small units. The effect, visible by the 1990s, was an industry of fragmented workshops that could not finance the large, integrated, vertically organised factories that global buyers prefer for placing bulk orders on tight deadlines. Garment manufacture was dereserved around 2000 and 2001, but by then Bangladesh, Vietnam and China had built exactly those factories. India remained strong where scale mattered less or where raw material access mattered more: cotton yarn, home textiles, embroidery and embellishment, and small batch fashion.

The trading rules changed at the same time. From 1974 the Multi Fibre Arrangement allocated importing countries' quotas among suppliers, which sheltered smaller exporters from Chinese competition. The World Trade Organization's Agreement on Textiles and Clothing phased those quotas out entirely by the start of 2005. Indian exporters gained access but also lost protection, and the immediate beneficiary of the change worldwide was China.

The present shape of the trade

Today the industry's problems are specific rather than general. Man made fibre is the fastest growing part of global apparel demand, and India, historically cotton oriented, is under supplied and comparatively high cost in polyester and viscose fabrics. Power costs, fragmented logistics and the time taken to move a container from an inland cluster to a port erode margins on goods where delivery reliability decides repeat orders. Effluent from dyeing has forced hard regulatory choices; Tiruppur was ordered to move to zero liquid discharge after severe pollution of the Noyyal river, an expensive transition that also became a competitive advantage when buyers began auditing environmental compliance. Labour is another constraint, since garment work relies heavily on migrant workers and on women whose participation is limited by hostel availability, transport safety and family expectations.

Government policy has swung towards scale and towards man made fibre. A production linked incentive scheme announced in 2021 targets man made fibre fabrics, garments and technical textiles, paying incentives on incremental turnover rather than on capital. A parallel scheme announced the same year proposes large integrated textile parks intended to put spinning, processing and garmenting on a single site with common effluent treatment and freight access. Trade agreements matter more than they used to: the economic cooperation agreement with the United Arab Emirates in 2022 and the agreement with Australia that took effect at the end of that year both removed tariffs on Indian apparel, and access to the European Union and the United Kingdom on terms comparable to Bangladesh has been a standing objective of Indian negotiators.

Two structural questions remain genuinely open. The first is whether India can win volume garment business at all, given that its wage advantage over Bangladesh and Vietnam is small and its factory scale is smaller. Some analysts argue the realistic prize is higher value work, short runs, complex construction and hand skills, rather than basic T shirts. The second is what becomes of handloom. India retains an enormous handloom sector, supported by reservation laws and government marketing, and its output includes textiles of a kind machines cannot make. Whether it survives as living craft, as heritage subsidy or as a marketing story attached to powerloom cloth is disputed, and the answer varies by region and by weave.

Back to the library