India's global apparel export share stuck at 3% despite China losing ground; FTAs, China+1 open opportunity: Report
India has failed to gain meaningful share in global apparel exports despite China’s declining dominance, holding at around 3% in 2025 while Bangladesh and Vietnam captured much of the China+1 shift. PL Capital says improving trade access and policy support could create fresh opportunities, but fragmented capacity, higher costs and weak integration remain key constraints.
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Context
A recent PL Capital report highlights that India's share in global apparel exports has stagnated at around 3% despite a significant decline in China's market share. While competitors like Bangladesh and Vietnam have capitalized on the 'China+1' strategy to increase their exports, India has lagged due to structural constraints. However, government initiatives like the and parks offer opportunities to leverage the ongoing shift in global supply chains.
UPSC Perspectives
Economic
The global apparel trade is experiencing a significant shift due to the China+1 strategy (a business strategy to diversify supply chains away from over-reliance on China). China's share of global apparel exports dropped from nearly 37% in 2010 to roughly 27% by 2025, creating a massive opportunity of $50-60 billion in 'floating volume'. Despite this, India's share has remained virtually stagnant, declining slightly from 3.2% to 3%. The primary beneficiaries have been Bangladesh and Vietnam, whose combined share surged from 7% to over 13%. These countries succeeded by offering lower production costs, establishing integrated manufacturing ecosystems, and securing favorable trade agreements. For India, a major hindrance is the lack of scale, characterized by fragmented garmenting capacity and limited integration across the value chain (fiber, fabric, and fashion). Furthermore, India's higher cost of capital and slower technology adoption compared to its Asian peers have blunted its competitive edge. Global buyers now demand reliability, traceability, and ESG (Environmental, Social, and Governance) compliance, leading to order consolidation among larger, more organized suppliers.
Governance
To address the structural bottlenecks in the textile sector and capture the 'China+1' opportunity, the Indian government has launched targeted policy interventions. The for textiles, launched with an outlay of ₹10,683 crore, specifically targets the production of Man-Made Fibre (MMF) apparel, MMF fabrics, and technical textiles, aiming to shift India's focus beyond its traditional strength in cotton. Furthermore, the scheme aims to create world-class industrial infrastructure that integrates the entire value chain—spinning, weaving, processing, garmenting, and packaging—at a single location. This seeks to address the issue of fragmented supply chains and reduce logistics costs, thereby attracting Foreign Direct Investment (FDI) and domestic capital. These schemes are crucial for creating the economies of scale required to compete globally and for transitioning the sector from fragmented, unorganized units to large-scale, execution-focused enterprises capable of meeting the stringent demands of international brands.
International Relations
India's stagnation in apparel exports highlights the critical role of trade diplomacy and Free Trade Agreements (FTAs). Competitors like Bangladesh benefit from duty-free access to major markets like the European Union under the Everything But Arms (EBA) initiative, while Vietnam has leveraged its membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and its FTA with the EU. India's lack of similar comprehensive trade pacts has historically put its exporters at a tariff disadvantage. However, improving market access through ongoing and recently concluded FTAs (such as with the UAE and Australia) is a key strategic priority to enhance export competitiveness. The report underscores that successful utilization of the 'China+1' opportunity requires not just domestic manufacturing capabilities but also strategic trade agreements that lower tariff barriers and integrate India into global value chains.