India’s domestic textile and apparel market is estimated to be $180 billion and growing at 9-10%. India is the second largest producer of cotton globally (5 million metric tons) and has the second largest spinning capacity in the world (60 million-plus spindles). Yet, one might argue that India has not fully seized the opportunity. Despite employing over 45 million people and producing an estimated 22 billion garments annually, exports have remained broadly stagnant at around $37 billion for nearly a decade, even as competing sourcing hubs have steadily gained share. Why do we not hear about the Ludhiana or Tiruppur clusters in the same breath as we do about similar clusters in other categories where India is making some very decisive moves?
Tariffs, global supply chain realignments and reconfiguration offer a unique opportunity for the industry which we believe is at a crossroads.
India largely focuses on upstream play, which has a significantly lower return on capital. This is driven by fragmented players, with nearly 10 companies whose revenues exceed $500 million. The government has proactively supported the sector through policy and reforms. So, the question is what must companies do?
First, let’s talk about the table stakes — build scale, integrate and modernise to capture a larger share of the garment value chain. India has built impressive capability in spinning, second only to China. That success, however, has not been replicated in weaving, processing, and “garmenting”, where productivity and integration matter most. Unlike spinning, 85% of the fabric is produced by small players who are inefficient and lack scale. This results in lower productivity versus peers (a 30%+ gap with China and Bangladesh). The leaders in the space need a strategic blueprint that gives them the comfort to invest for world-class returns.
Second, drive productivity with data and Artificial Intelligence (AI). Even as India builds scale operations, its private players have the opportunity to step up the game on productivity and cut down lead times vs our global peers (30-50%) higher. This can come via rapid adoption of low-cost AI, planning systems that help drive efficiency, and rapid turnaround times versus our regional competitors such as Vietnam. There is an opportunity to enhance productivity and efficiency by 20-30% by transforming operations and using fit-for-purpose digital planning solutions. This needs to be backed by a ruthless pursuit of efficiency across the value chain. Reducing lead times and bringing predictability materially shapes buyer behaviour. Companies need to adapt technology to meaningfully compress lead times and variability, rather than remain confined to pilots.
Third, revisit the focus portfolio and leapfrog. The nature of value creation in textiles is shifting. Growth is being driven by man-made fibres, technical textiles, design-led services, and sustainability-linked differentiation. Globally, man-made fibres account for close to 70% of raw material consumption, while India’s production remains skewed toward cotton at nearly 60%. Where Indian firms have moved into higher-value niches, the economics are already visible, with downstream and specialised segments delivering materially higher margins than upstream manufacturing.
The next phase of India’s textile journey will, therefore, be defined less by headline capacity additions and more by execution choices. Can large, compliant capacity be scaled reliably across states, when fewer than a dozen textile companies today generate revenues above ₹5,000 crore?
The opportunity before India is real, but it is not in perpetuity. Global buyers are allocating sourcing volumes now, and competing ecosystems are moving with speed and coherence. Domestic demand will continue to anchor industry growth, but exports offer sharper margins.
For India to emerge as a true alternative manufacturing hub rather than a supplementary one, the industry must rapidly make bold choices and transform. The next few years will not reward potential but will put a premium on those who execute consistently, integrate deeply, and deliver predictability in a world that increasingly values reliability over rhetoric.
Rahul Jain is India head, BCG, and Namit Puri is Asia-Pacific leader (Consumer Practice), BCG. The views expressed are personal
