For decades, India’s textile industry has been a cornerstone of its economy, a massive employer, and a key source of foreign exchange. But today, it’s facing a perfect storm. On one side, global supply chains are being redrawn by the ‘China+1’ strategy. On the other, domestic manufacturers are grappling with high costs and stiff competition from neighbors like Bangladesh and Vietnam. The recent Union Budget 2026 introduced a five-pronged integrated programme, but the question on everyone’s mind is: are these tweaks truly enough to cut it in the modern global market?
Table of Contents
- The Global Opportunity and the Domestic Reality
- Why India’s Textile Industry is Losing Ground
- The PLI Scheme: A Golden Bullet or a Blunt Tool?
- What It Will Take to Beat Bangladesh and Vietnam
- Conclusion: Weaving a New Future
- Sources
The Global Opportunity and the Domestic Reality
The world is looking for alternatives to China. The ‘China+1’ strategy, where global brands diversify their manufacturing base, presents a massive $10 billion opportunity for India [[12]]. This should be our moment to shine. However, the reality on the ground tells a different story.
Despite the hype, India’s share in US textile imports is growing at a slower pace than its rivals. In July 2025, imports from India were up just 9.1%, while Vietnam and Bangladesh maintained stronger momentum [[39]]. This gap isn’t accidental; it’s structural. Our competitors have spent years building efficient, vertically-integrated ecosystems that offer speed, scale, and lower landed costs.
Why India’s Textile Industry is Losing Ground
The challenges facing the Indian textile industry are multifaceted:
- Cost Competitiveness: High logistics costs, complex tax structures, and expensive power make Indian goods less competitive on the global stage. The Confederation of Indian Textile Industry (CITI) has repeatedly flagged the need for targeted measures to address these domestic cost challenges [[1]].
- Fragmented Manufacturing: Unlike Bangladesh’s large, efficient garment units, India’s sector is dominated by small, unorganized players who struggle to meet the quality and compliance standards demanded by international buyers.
- Man-Made Fibre (MMF) Gap: The future of fashion is in MMF, but India is still heavily reliant on cotton. To make matters worse, we are flooded with cheap Chinese MMF imports, which hurt domestic producers [[13]].
The PLI Scheme: A Golden Bullet or a Blunt Tool?
In response, the government launched the ₹10,683 crore Production Linked Incentive (PLI) scheme for textiles in 2021, recently extended with a new application window [[24], [26]]. Its goal is clear: boost production of MMF apparel, fabrics, and technical textiles, and create 7.5 lakh jobs [[25]].
While 30 units have already started production under the scheme [[27]], experts argue its impact is limited. The PLI scheme is a good start, but it’s not a silver bullet. It primarily benefits large, organized players who can navigate the complex application process, leaving the vast MSME sector—the backbone of the industry—largely untouched [[5]].
The Budget 2026 did try to address some pain points, like extending the export period for finished garments from six months to a year and focusing on logistics [[5]]. But these are incremental improvements, not the radical overhaul needed to compete with nations that have built their entire economic strategy around textile exports.
What It Will Take to Beat Bangladesh and Vietnam
To truly capitalize on the ‘China+1’ opportunity and outpace Bangladesh and Vietnam, India needs a multi-pronged attack that goes beyond subsidies:
- Build a Seamless Ecosystem: The success of the PM MITRA Mega Textile Parks is critical. These parks must offer plug-and-play infrastructure, single-window clearances, and integrated facilities from fibre to fabric to fashion to attract global investment [[4]].
- Empower the MSME Sector: A dedicated support package for MSMEs, including easier access to credit, technology upgradation funds, and skill development, is non-negotiable. They are the key to scaling up quickly.
- Fix the Logistics Nightmare: Reducing the time and cost of moving goods from factory to port is essential. Investments in dedicated freight corridors and streamlined customs processes are a must.
- Double Down on Sustainability: Global brands are increasingly demanding eco-friendly products. India must lead in sustainable practices, from organic cotton farming to waterless dyeing technologies, to command premium pricing [[7]].
Conclusion: Weaving a New Future
The potential for India’s textile industry is undeniable. With its vast raw material base, skilled labor, and a strategic location, it has all the ingredients to become a global leader. However, the current approach of minor policy tweaks and isolated schemes like the PLI is insufficient. The competition from Bangladesh and Vietnam is fierce, and they are not standing still. To seize this historic moment, India needs a bold, cohesive, and execution-focused national strategy that addresses the root causes of its uncompetitiveness. The time for half-measures is over; the industry needs a complete transformation, not just a few stitches.
Sources
- Confederation of Indian Textile Industry (CITI) Newsletters, January 2026 [[1], [5], [9]]
- Union Budget 2026-27 Highlights for Textile Sector [[4], [6], [7]]
- Fibre2Fashion, “Highlights for textile sector in India’s Budget 2026-27” [[4]]
- Economic Times, “Budget 2026: Textile boost through five-pronged integrated programme” [[6]]
- The Hindu, “30 units start production under the PLI Scheme for textiles” [[27]]
- Textile Today, “India trails Vietnam and Bangladesh in US textile import growth” [[39]]
- Down To Earth, “Budget 2026: Boost for modernisation and sustainability in Indian textile industry” [[7]]