The "China+1" trend of global brands diversifying sourcing away from China is opening a multi-year export growth window for India's textile and apparel industry, according to a latest Jefferies report. However, the report also notes a structural mismatch: India's export mix remains dominated by cotton products, while global demand is tilting toward man-made fibres (MMF).

The report puts the market base at over $900 billion in global textile and apparel trade, with apparel accounting for about 60%. India is seen as well-positioned to capture the shift — an integrated supply chain from fibre to finished garments, an export base of about $37 billion, ample raw materials, skilled labour, and supportive government policies. The report writes that improved trade competitiveness and supply chain reconfiguration offer India a "multi-year runway for export growth and share gains."

Among sub-categories, home textiles are viewed as a structural bright spot, accounting for about 7% to 10% of global textile and apparel trade. Housing construction, renovation spending, premiumisation, and consumer focus on home aesthetics all support demand. India already holds about 45% to 60% of key US home textile categories such as bedding and towels, but only about 5% to 25% in the UK and EU, leaving clear room for gains.

Free trade agreements are seen as highly promising. The UK-India FTA, effective July 2026, and a potential India-EU FTA expected to launch from 2027, could give India access to an approximately $220 billion textile and apparel import market on better tariff terms. The report notes that tariff advantages previously enjoyed by competitors such as Bangladesh will be eroded; combined with China+1, supplier consolidation, and Bangladesh's gradual loss of least-developed-country treatment, these agreements are expected to deliver substantial share gains for Indian exporters.

However, the report also highlights India's gap with major import markets. The US, EU, and UK together import over $300 billion in apparel, with cotton accounting for 43% of EU apparel imports. Despite a complete cotton chain and strong manufacturing capabilities, India holds only about 3% of EU apparel imports and about 6% in the UK; in several major cotton apparel categories in the US, it also trails Bangladesh and Vietnam.

Jefferies believes India has long underperformed Bangladesh and Vietnam in apparel exports due to limited FTA coverage, high logistics and compliance costs, relatively small garment capacity, and a cotton-heavy product mix. Meanwhile, global demand is shifting more toward man-made fibre apparel, sportswear, and athleisure — precisely the areas where India's presence is relatively limited. (ANIT report)

Source: India's textile sector poised for multi-year export growth, but shift toward man-made fibres remains a challenge: Jefferies · Originally published 2026-09-09