How Trump’s Tariffs Could Boost India’s Textile Sector: The Need for Innovation to Seize the Opportunity

The Indian textile industry plays a crucial role in the country’s economy, especially in job creation and exports. Recently, the Union Budget for 2025-26 allocated Rs 5,272 crores to the Ministry of Textiles, marking a significant 19% increase from the previous year. This move highlights the government’s commitment to revitalize this vital sector.

Historically, India has been a leader in cotton textiles, but there’s a noticeable shift toward man-made fiber (MMF) textiles. Today, around 70% of global textile trade involves MMF. As a result, India’s demand for cotton is declining. The country has been trying to keep up with competitors like Vietnam, which has seen an impressive growth rate in MMF exports, clocking in at 18.44% as of 2019.

In recent data, India’s import of MMF textiles experienced a 13% drop from April to October 2024. On the other hand, exports increased by 5%, suggesting a growing interest in these materials within the domestic market. Although India is known for its technical textiles, the gap between exports and imports is narrowing, showcasing an urgent need to innovate.

Despite these challenges, the Indian government has made significant investments to boost domestic production and quality. A notable allocation of Rs 1,948 crores for research and capacity-building shows a clear intent to enhance industry capabilities. This includes the Production Linked Incentive Scheme (PLI), which supports modern manufacturing practices, and efforts to improve the quality of homegrown textiles.

The textile landscape is evolving quickly. Higher US tariffs on competing countries might create a potential opportunity for Indian exporters, positioning them to gain a larger market share. However, focusing solely on immediate gains without long-term investments in innovation could jeopardize future growth.

Experts emphasize that robust research efforts are essential for crafting effective policies and navigating this complex market. Investing in technology and quality assurance can help India reclaim its position in global textile trade.

As the industry adapts to new trends, it must strive to balance short-term opportunities with sustainable growth strategies. This proactive approach will be critical for India to thrive in the competitive global textile arena.



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