Textile-Garment & Made-up Exports

Contract manufacture of knitted and woven garments, and home textiles including bed linen, towels, terry products and made-ups, produced to global retailers' and brands' specifications for export markets

Scale, compliance and vertical integration are genuine differentiators: global brands are consolidating vendor lists toward large, audited, socially compliant suppliers, and Indian exporters with integrated fabric-to-garment capability and certified factories are positioned to capture disproportionate share as that consolidation proceeds

The product is made to the customer's design with no owned brand: so the manufacturer earns a conversion margin and competes primarily on delivered cost against Bangladesh, Vietnam, China and newer origins, which is why a change in relative tariffs can reprice the entire industry overnight

Customers are large US and European retailers and brands, with concentration extreme- several listed exporters derive between 40% and 70% of sales from the United States alone

Qualification and delivery reliability make approved vendors hard to replace: long qualification cycles, audited compliance and proven delivery reliability lock in an approved vendor mid-season, and India recently overtook China as the largest exporter of knitwear to the United States

That concentration proved dangerous when tariffs escalated: in FY26 buyers advised Indian exporters to suspend shipments even against confirmed orders, showing contractual commitments offer little protection when the customer's landed cost changes, and brands relocated sourcing toward Ethiopia, Nepal and other lower-tariff origins rather than absorb cost

Cost is fabric and trims, garmenting labour which is the segment's largest controllable input, factory overhead, freight, and increasingly compliance and audit costs demanded by Western buyers

Labour cost position and export support are both favourable: RoDTEP has been extended to 30 September 2026 and RoSCTL for garments and made-ups a further six months, while duty exemption on raw cotton restores input parity with competing origins

Tariffs sit outside the cost structure yet determine competitiveness: the US reciprocal rate on India moved from 10% in April 2025 to 25% by August and 50% by 28 August, against 20% for Bangladesh and Vietnam and 30% for China, an overnight competitive reversal no operational efficiency could offset

MSME suppliers cannot absorb the shock: labour-intensive units have limited ability to absorb tariff costs, and confirmed-order suspensions left capacity idle and working capital stranded mid-season

Ready-made garments remain the largest component of Indian textile exports at about Rs 1.39 trillion in FY26, growing 2.9% within total textile exports of roughly Rs 3.16 trillion, against an industry ambition of $100 billion of annual exports by 2030

The tariff position has improved dramatically and visibility is recovering: the US-India trade deal cut the rate on Indian textiles from 50% to 18% and it has since normalised to around 10%, narrowing the gap against Bangladesh, Vietnam and Indonesia at 19-20% and turning a severe disadvantage into a modest advantage, while global retail inventory has normalised, order visibility is improving, brand consolidation favours scaled compliant suppliers, and the India-UK free trade agreement adds a further access route

The FY26 experience shows how fragile this is: CRISIL projected garment revenue growth halving to 3-5% and the US share of Indian garment exports falling from 33% to 20-25%, and a proposed mechanism allowing Bangladesh reduced-tariff volumes could erode the regained parity

A segment of scaled listed exporters and a very large base of MSME garment units, competing internationally against Bangladesh, Vietnam, China and emerging low-cost origins

Scale and compliance are becoming the barrier: brands consolidate vendor bases toward audited suppliers able to handle volume, traceability and social compliance, which structurally favours the larger listed exporters, and integrated exporters running fabric and garmenting together can guarantee lead times standalone garment units cannot

Competition is entirely international and decided by landed cost: tariff regimes, labour rates and currency matter more than manufacturing skill, and India competes against origins with duty-free access to key markets and lower wage costs

The defining risk is trade policy, which sits wholly outside management control and can reset the industry's competitiveness within weeks

Trade policy and customer concentration proved decisive in FY26: the escalation from 10% to 50% within five months and the resulting suspension of confirmed orders showed a single policy decision can idle capacity irrespective of performance, compounded by several exporters deriving 40-70% of sales from the US and brands relocating production rather than absorbing cost

Input and currency volatility add conventional risk: cotton and fabric input costs, freight and currency add volatility, and MSME suppliers in the chain have minimal capacity to absorb shocks

Offsetting: the tariff has normalised to roughly 10% giving India a competitive position against peers at 19-20%, retail inventory destocking is complete, vendor consolidation favours scaled compliant exporters, and export support schemes plus the cotton duty exemption have been extended