India’s textile industry reached nearly USD 190 billion in FY2026 and is targeting USD 350 billion by 2030, according to the October 2026 report Rubix Industry Insights: Textiles Update published by Rubix Data Sciences. Rising domestic demand, manufacturing investments and export opportunities are expected to support the industry’s growth, although trade uncertainty, higher raw material costs and import dependence remain challenges.
The report comes as the Indian government considers a proposed INR 400 billion five-year Textile Expansion and Employment (TEEM) Scheme. The initiative aims to modernise traditional textile clusters through machinery upgrades, advanced technology and common testing facilities to improve productivity, global competitiveness and exports.
Textile Exports Rebound After FY2026 Decline
India’s textile and apparel exports declined by 2.7% to USD 35.8 billion in FY2026, while imports increased by 17.1% to USD 9.6 billion. Despite the decline in exports, India remained a substantial net exporter, with export value nearly 3.7 times that of imports.
Readymade garments (RMG) maintained a 44% share of India’s textile exports in FY2026. Meanwhile, man-made fibre (MMF) textiles increased their share from 14% in FY2025 to 15% in FY2026.
Export performance improved during the first five months of FY2027. India’s textile exports, including handicrafts, grew by 10.3% year-on-year between April and August 2026. Cotton textile exports increased by 18.0%, while MMF textile exports rose by 13.6%.
The recovery follows a challenging FY2026 and comes amid continued uncertainty in major international markets.
US Remains India’s Largest Textile Export Market
The United States accounted for 31% of India’s textile and apparel exports in FY2026, making it the country’s largest export destination. The European Union contributed nearly 16%.
However, changes in US trade policy and uncertainty surrounding negotiations have complicated the export outlook.
In February 2026, the US–India trade framework announced a reduction in the reciprocal tariff rate to 18%, compared with 20% for Vietnam and 30% for China. In July 2026, the United States introduced a separate additional 10% duty under Section 301 measures concerning forced-labour import enforcement. As of October 2026, trade negotiations appeared to have stalled.
Exporters are responding by diversifying their markets. Exports to the US from India’s textile, apparel and handicraft sector declined by approximately 7% in FY2026, while exports to major European markets increased by 9% year-on-year.
Companies are also reassessing their dependence on the US market. Raymond Lifestyle plans to reduce the US share of its exports from 65% to 55%–60% over two years. Kitex Garments plans to lower the US share of its business from nearly 100% to 30%–35% over the next two to three years.
These developments highlight the importance of expanding market access and reducing dependence on individual export destinations.
Cotton Yarn Prices Rise 60%, Putting Pressure on Margins
Rising cotton yarn prices have emerged as a significant cost concern for India’s textile value chain. Prices increased by approximately 60%, reaching INR 400 per kg in September 2026 from INR 250 per kg at the beginning of the year.
The increase comes amid a decline in domestic cotton production. Output fell to 290.91 lakh bales in the 2025–26 season, compared with 352.48 lakh bales in 2020–21.
To ease input costs, the government temporarily exempted cotton imports from the 11% import duty from June 1 to October 31, 2026. The textile industry is seeking a six-month extension beyond the existing deadline.
However, domestic cotton farmers have raised concerns that continued duty-free imports could put downward pressure on prices during the new harvest season. The issue presents a policy challenge involving the need to manage input costs for textile manufacturers while addressing the interests of domestic cotton producers.
Cotton textiles account for approximately 30% of India’s textile exports. Their export value grew by 18.0% between April and August 2026.
In May 2026, the Union Cabinet approved an outlay of INR 56.59 billion for the Mission for Cotton Productivity covering 2026–27 to 2030–31. The initiative aims to improve cotton yields and quality while strengthening India’s self-sufficiency in cotton.
MMF Textiles Gain Export Share Amid Import Dependence
Man-made fibre textiles are gaining a larger share of India’s export basket. Their contribution increased from 14% in FY2025 to 15% in FY2026, while export value rose by 13.6% during April–August 2026.
Policy measures are also being directed towards expanding domestic manufacturing capacity in this segment.
In October 2025, the government revised the Production Linked Incentive (PLI) Scheme for MMF apparel, MMF fabrics and technical textiles. The changes added 17 MMF product codes, halved minimum investment thresholds for new applicants and reduced the incremental turnover requirement from 25% to 10%.
In April 2026, 52 new applications were approved under Round III of the PLI Scheme for Textiles, with committed investments of INR 67.08 billion.
Despite these measures, import dependence remains a concern. Man-made textiles accounted for 41% of India’s textile imports in FY2026, up from 39% in FY2025. The increase highlights the gap between efforts to expand domestic manufacturing and the industry’s current reliance on imported synthetic textiles.
PM MITRA Parks and Manufacturing Investments Support Expansion
Infrastructure development and capital expenditure are additional components of India’s textile growth strategy.
The government has approved seven PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks. The first park, located in Warangal, Telangana, was inaugurated in May 2026.
Each park is expected to generate approximately 3 lakh jobs once fully developed, comprising 1 lakh direct and 2 lakh indirect employment opportunities.
According to the report, the PM MITRA States had received investment interest amounting to INR 685.9 billion as of August 11, 2026.
Major manufacturers have also announced capacity expansion and capital expenditure plans. Grasim Industries announced an investment of INR 30.94 billion for Phase II Lyocell capacity in June 2026. Vardhman Textiles announced a broader capital expenditure programme worth INR 36.6 billion in July 2026.
These investments reflect ongoing efforts to expand manufacturing capacity and strengthen the textile industry’s production base.
Export Diversification and Cost Competitiveness Remain Key Priorities
Commenting on the findings, Tushar Bhaskar, President of Rubix Data Sciences, highlighted the industry’s export recovery alongside continuing cost and trade pressures.
“India’s textile industry has shown resilience, with exports growing 10.3% in April–August 2026 after a 2.7% decline in Dollar terms in FY2026. At the same time, trade uncertainity in the US market a risen of approximately 60% in cotton yarn prices, and freight disruptions are adding to the pressure. This reinforces the importance of diversifying India’s export destinations and improving cost competitiveness.”
The report identifies export diversification, input cost management, manufacturing investment and domestic supply development as important considerations for the sector’s outlook.
With the textile industry targeting USD 350 billion by 2030, the pace of export growth, the effectiveness of manufacturing incentives and the ability to manage raw material costs will remain important factors in India’s efforts to expand its global textile market presence.