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India is poised to regain its lost prominence in the global textiles and apparel industry, supported by policy reforms, free trade agreements (FTAs), a favourable tariff environment and strong domestic demand, according to a report by Emkay Research.

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The report said the country's textile sector is at a critical turning point after its share in global apparel trade remained stagnant at 3-4 per cent over the last 15 years.

"India has, traditionally, been a textile powerhouse but lost market share in the global apparel trade, which has been stagnant at 3-4% over the past 15Y. However, we believe India is at an inflection point to regain its lost glory," the report stated.

Key Growth Drivers

According to the report, several structural drivers are expected to accelerate growth, including the strengthening of the domestic man-made fibre (MMF) ecosystem through Production Linked Incentive (PLI) schemes, PM MITRA parks and petrochemical capacity additions.

The implementation of FTAs with key markets such as the European Union, the United Kingdom, Australia and other economies is also expected to improve India's competitiveness.

The report highlighted that India's textile exporters stand to benefit from a 7-8 per cent tariff advantage in the United States market compared with China, alongside favourable import duties, GST reforms and stronger corporate balance sheets.

It added that the country's rapidly expanding apparel market further strengthens the sector's growth outlook.

Demonstrated Resilience

Emkay Research noted that India's textile and apparel manufacturers have demonstrated resilience despite multiple global disruptions, including the Covid-19 pandemic, the Russia-Ukraine conflict and elevated US tariffs.

"Backed by a robust domestic market, favorable USD-INR rate, and strong balance sheet, we believe domestic players would be able to absorb future shocks too," the report added.

Opportunities from FTAs

The report also pointed to significant opportunities arising from upcoming FTAs with the European Union and the United Kingdom.

It said the removal of import duties on Indian textile products in these markets could help domestic exporters gain market share from competing nations such as Bangladesh and Vietnam.

Technical Textiles: A Major Growth Segment

In addition, the report identified technical textiles as a major growth segment, citing increasing demand in packaging, defence, automotive and industrial applications.

"Technical textiles' domestic market size saw 7-8% CAGR over FY20-26P; we expect this to increase to early-double digits over the next 5Y," the report said, attributing the expected growth to FTAs, tariff advantages over China, government support through PLI schemes and PM MITRA parks, and lower GST rates on MMF fibres and yarns.

(ANI)