FW
The net-zero industrial design championed by individual units is now transforming the broader Indian textile landscape, providing a powerful financial model for growth. The Tiruppur knitwear cluster, which accounts for 55% of India’s knitwear exports, has seen exports rebound sharply, logging a 22% year-on-year increase in August 2024. This recovery, following an 11% dip in the previous fiscal year, is directly attributed to the "Green Tiruppur" sustainable strategy. New research shows that manufacturers are prioritizing sustainability to target a significant 2-3x rise in profits over the next few years.
Net-Zero model becomes capacity edge
The cluster's historical investment in sustainability now functions as a major competitive edge (Growth Plan). The region is generating approximately 1,900 MW of wind and solar power—nearly five times its operational energy requirement—positioning the cluster as a carbon-negative zone. Furthermore, the widespread adoption of Zero Liquid Discharge (ZLD) systems, which recycle processed water, has made the hub water-neutral. This radical overhaul provides the required capacity and compliance for large-scale production.
Global mandate attracts major buyers
The move is cemented by global compliance challenges, such as the EU's Carbon Border Adjustment Mechanism (CBAM), which penalizes high-carbon imports. This context has made compliance non-negotiable, and Tiruppur's verifiable ESG performance is now attracting major global buyers, including Gap and Tommy Hilfiger, who are re-routing substantial orders to the region. The industry is demonstrating that the path to resilient export performance is intrinsically linked to pioneering environmental stewardship.
While broad retail data reflects caution (with some clothing categories posting negative readings in recent US sales reports), a stark divergence is redefining the apparel sector’s financial outlook. The new resiliency champion is value fashion. Recent industry analysis highlights this split, with a collective of value-focused players reporting an aggregated 33% year-on-year revenue increase in the latest quarter. This spike is primarily fueled by aggressive expansion—nearly 20% retail area addition—into Tier 2 and beyond markets, underscoring a permanent post-inflation shift where over 60% of global shoppers prioritize price.
Agility: The $275 bn tech pivot
The strategic challenge for all brands is proving their value proposition. Agility and technology adoption are now non-negotiable for future growth plans. Executives are accelerating investments, recognizing that Generative AI alone could add $150–$275 billion in operating profits to the fashion sector over the next three to five years. This tech push—from AI-driven trend forecasting to in-season inventory optimization—is critical for brands seeking to maintain tight gross margins amidst persistent macroeconomic volatility.
Major brand reinvigoration
Even established apparel giants are capitalizing on this focus. Gap Inc., a U.S. specialty apparel company operating brands like Old Navy and Banana Republic, recently reported its third-quarter fiscal 2025 results with a robust 5% comparable sales uplift. This performance, which led the company to raise its full-year operating margin outlook, is attributed to a "reinvigoration playbook" centered on disciplined cost control and product elevation. This suggests that while shoppers are cautious, they reward brands that offer a compelling blend of refreshed product and proven reliability.
Europe’s textile and clothing industry, a vital ecosystem comprising roughly 200,000 companies and 1.3 million workers with an annual turnover of €170 billion, is facing a severe structural threat driven by uneven global competition. Data for the first half of 2025 reveals a crisis: textile production fell by 1.9% and clothing production dropped by 5%, while employment decreased by up to 5% across the sector. This contraction is fueled by a massive surge in non-compliant foreign imports, which rose by 7.7% for textiles and 12.3% for clothing during the same period.
Closing the customs "De Minimis" loophole
The industry’s representative body, EURATEX, warns that this competitive imbalance stems largely from the de minimis exemption. This loophole allows millions of low-value parcels (under €150) to enter the EU daily without standard customs, VAT, or safety checks. The problem is exacerbated by certain national postal operators in countries like Poland and Italy, who are reportedly accelerating deliveries for ultra-fast fashion platforms such as Temu, actively widening the regulatory gap.
EURATEX President Mario Jorge Machado affirmed that while the recent European Parliament resolution for stronger market surveillance is welcomed, "the real test starts today." The industry is demanding decisive legislative action, specifically the abolition of the de minimis exemption, to restore a level playing field and prevent the further erosion of European industrial standards. The forthcoming ECOFIN meeting on December 12 is viewed as a critical milestone for enacting these overdue reforms.
India’s textile and apparel export sector is showing a remarkable capacity to adapt and thrive in one of the most turbulent global trade environments in recent years. From punitive US tariff shocks to unpredictable demand cycles across international markets, the sector’s first-half performance (April-September 2025) reveals not just survival, but strategic reinvention.
Despite the headline showing a marginal 0.39 per cent growth in overall global exports, a deeper look at the numbers tells a different story one of intentional diversification, policy-backed resilience, and targeted expansion into new and emerging markets. The textile industry, one of India’s largest employment generators, is quietly rewiring its export engine for a more volatile global order.
Flat global growth, strong market focus
The data for the April-September period captures a dual-speed export reality. While global shipments of textiles, apparel, and made-ups saw only muted growth, rising from $17.66 billion to $17.73 billion, a negligible increase of 0.39 per cent the sector’s performance in targeted growth markets tells a far more encouraging story.
Table: India’s export performance April-September 2025
|
Metric |
April–September 2025 |
April–September 2024 |
Change |
Takeaways |
|
Exports to 111 Targeted Markets |
$8,489.08 mn |
$7,718.55 mn |
+10.0% |
Focus areas grew robustly. |
|
Overall Global Exports of Textiles, Apparel & Made-ups |
$17,735.56 mn |
$17,666.51 mn |
+0.39% |
Sector was largely flat (marginal 0.1% growth mentioned in image text). |
The 10 per cent growth in the 111 priority markets compared to the almost stagnant global number highlights a sector that is consciously moving away from its traditional overdependence on a handful of legacy destinations, particularly the US and Europe. This strategy mirrors India's broader export pattern. While India’s total merchandise exports grew by 3.02 per cent, textiles significantly outperformed in markets where government-led diversification strategies have been applied with precision. Ready-made garments (RMG) and jute were among the notable bright spots RMG grew 3.42 per cent, while jute expanded 5.56 per cent, signaling sustained global demand for natural fiber-based, sustainable products.
The rise of non-traditional markets
If the last decade was defined by dependence on the US and EU, this year marks the beginning of India’s new export geography. Several emerging markets delivered double-digit growth, providing vital cushioning against the steep decline in tariff-affected markets like the US.
Table: Market growth trends (Apr–Sep)
|
Market |
Growth (YoY) |
Interpretation |
|
Japan |
+19% |
Strong traction for high-quality apparel and technical textiles; Japan emerges as India’s stability market. |
|
UAE |
+14.5% |
A regional re-export and retail powerhouse; Indian brands seeing renewed traction. |
|
France |
+9.2% |
Premiumization and sustainable materials are driving orders. |
|
Spain |
+9% |
Fast-fashion and mid-market retailers increasing sourcing from India. |
Table: New market momentum
|
New Region |
Growth (YoY) |
Interpretation |
|
Hong Kong |
+69% |
Reflects China+1 shifts and sourcing realignments. |
|
Egypt |
+27% |
India filling supply gaps after local currency pressures and import constraints. |
|
Saudi Arabia |
+12.5% |
Retail modernization and new mall expansion fueling apparel growth. |
This diversification is not accidental. It stems from sustained engagement through trade missions, revamped export incentives, and collaborative agreements pushed aggressively under India’s Make in India and Aatmanirbhar Bharat frameworks.
US tariff hits India’s largest market
The most dramatic shock of the year came from Washington. In late August, the US slapped a 50 per cent tariff on multiple Indian goods including textiles and apparel ostensibly in response to India’s continued imports of Russian oil. For a sector where the US traditionally accounts for nearly 28 per cent of all exports, the impact was immediate and severe.
Table: September 2025 tariff shock, decline in US shipments
|
Segment |
September 2025 value |
September 2024 value |
Change (YoY) |
|
Ready-Made Garment (RMG) Exports |
$997.54 mn |
$1,110.15 mn |
-10.14% |
|
Textile Exports (excluding Apparel) |
$1,624.06 mn |
$1,813.63 mn |
-10.45% |
|
India's Overall Exports to US |
$5.46 bn |
$6.20 bn |
-11.93% |
The US decline stands in stark contrast to double-digit export growth in non-traditional markets. It also highlights a structural vulnerability: India’s largest buyer can dramatically shift sectoral momentum with a single policy decision.
India responds with a $5 bn export lifeline
To counter the tariff shock and boost exporter liquidity, the government of India announced a powerful package combining direct export support, credit guarantees, and compliance funding. At the heart of this policy overhaul is the Export Promotion Mission (EPM), a unified, nearly $ 3 billion or Rs 25,060 crore program running through FY 2030-31. Alongside this is a $2.3 billion credit guarantee scheme, replacing multiple older schemes and creating a streamlined, MSME-friendly system.
Table: Components of EPM
|
Sub-Scheme |
Focus Area |
Goal |
|
Niryat Protsahan |
Financial Support |
Provide affordable trade finance and credit guarantees to MSME exporters, helping them absorb tariff costs and maintain liquidity. |
|
Niryat Disha |
Export Readiness & Compliance |
Enhance global competitiveness through support for quality certification, global branding, logistics, and meeting non-tariff barriers, essential for competing with lower-tariff countries like Vietnam and Bangladesh. |
The industry views this as the most cohesive export framework in over a decade. By unifying fragmented schemes, the government aims to increase scale efficiency, ease of compliance, and competitiveness.
De-risking, re-skilling and re-positioning
The sector’s growth path for 2026 and beyond will be shaped by two factors: market de-risking and manufacturing competitiveness.
Market diversification as a strategic insulation: The strong growth in 111 targeted markets provides a blueprint for insulating exports from political or economic shocks. Fast-moving FTAs with the UK and EU are expected to offer duty-free access potentially transforming India’s pricing advantage over Vietnam, Turkey, and Bangladesh.
Infrastructure-led competitiveness: The PM MITRA Parks, seven mega integrated textile and apparel zones are designed to cut logistics costs by up to 10-12 per cent, improve turnaround times, and allow India to compete more effectively with China’s vertically integrated clusters.
The $100 bn ambition: India aims to more than double its textile and apparel exports to $100 billion by 2030. While ambitious, analysts say the first-half performance shows the foundational pieces are falling into place: wider export geography; stronger policy scaffolding; shift toward value-added products; better logistics and integrated parks; early FTA tailwinds
Thus India’s textile industry enters 2026 with scars from tariff shocks, but with renewed confidence and broader shoulders. The sharp US decline could have crippled the sector a decade ago. Instead, today it stands more diversified, better supported, and more globally aligned than ever.
By betting on emerging markets, accelerating policy reforms, and building world-class supply-chain ecosystems, India is crafting a more shock-resistant export engine one capable not only of surviving global turbulence but of shaping new competitive spaces.
Sri Lanka’s apparel and made-up articles sector demonstrated resilience, recording a robust 6.12 percent year-on-year increase in total exports for the cumulative period of January to October 2025. The Joint Apparel Association Forum (JAAF) noted that the sector "continues to hold steady despite challenging global conditions," highlighting the industry's ongoing investments in competitiveness. This strong performance saw total apparel exports sustain momentum over the first ten months of the year.
Market Divergence: EU powers ahead
While the overall January-to-October performance was strong, October 2025 saw a marginal decline of 0.05 percent compared with the previous year. This slight dip was driven by major market slowdowns, as shipments to the USA fell by 1.92 percent, and exports to the UK dropped by 11.99 percent during the month. Conversely, the European Union (EU) remained a powerhouse, recording strong growth of 12.53 percent in October. For the cumulative period, exports to the EU showed a substantial 14.05 percent increase, while the USA recorded more modest growth of 1.37 percent.
Industry Outlook: Diversification and policy support
JAAF emphasized that the positive cumulative figures "reflect the industry's resilience" and its commitment to meeting international buyer needs. Exports to the UK and other markets also reported modest cumulative growth of 0.98 percent and 8.31 percent, respectively, over the same period in 2024. Looking ahead, the industry views sustained market diversification and consistent policy support as essential to build on this momentum.
Fashion for Good announced a major step toward sustainable fashion on November 27, 2025, with the launch of the Future Forward Factory blueprint. This first-of-its-kind, open-source guide is designed to break the decarbonization deadlock in textile manufacturing, which is one of the industry's biggest emissions hotspots.
The blueprint provides five practical, financially viable pathways for Tier 2 manufacturers in India—focusing on textile dyeing, treatment, and finishing—to achieve near-net-zero operations. Full implementation of the processes and infrastructure upgrades can lead to a drastic 93% reduction in carbon emissions, alongside a 33% drop in water usage and a 41% cut in electricity consumption.
By including critical financial analysis like payback periods and an overview of government incentives, the blueprint provides a clear, implementable "how-to" for factory transformation, systematically dismantling the barrier of high upgrade costs.
Developed with partners including Laudes Foundation and anchor partner Arvind Mills, Fashion for Good is already exploring the set-up of the first fully operational Future Forward Factory to serve as a real-world proof of concept. This initiative aims to accelerate the fashion industry’s essential transition to a regenerative future.
The European apparel and textile sector is bracing for mandatory price increases following the fast-tracked EU decision to abolish the €150 customs duty exemption (de minimis) for non-EU e-commerce imports. This shift, set for early 2026 rather than the original 2028 target, aims to level the playing field for domestic retailers. The change will impose tariffs and potential handling fees—such as the proposed €2 charge per low-value shipment—directly onto the massive influx of foreign goods. This directly affects the profitability model of ultra-low-cost online giants like Shein and Temu, which drove the surge of over 4.6 billion low-value parcels into the bloc last year, with over 90% originating from China.
Mandatory data and compliance friction
Beyond tariffs, the industry must contend with heightened compliance expenses under the Import Control System 2 (ICS2). This requires e-commerce platforms and carriers to submit granular data, including precise 6-digit Harmonized System (HS) codes and consignee details, before goods arrive. Non-compliance, such as using vague product descriptions, risks shipment rejection and administrative penalties, directly increasing supply chain friction and costs.
For established European retailers, who are currently struggling against the competition that has captured an estimated 20% of the EU's online clothing market, the customs overhaul presents a critical, if delayed, opportunity to regain competitiveness and ensure imported garments meet EU safety and sustainability standards.
Renowned designer Patricia Urquiola is set to present a completely new and immersive design experience, 'among-all,' at Heimtextil 2026, running from January 13 to 16, 2026. This installation, located in Hall 3.0, is the second chapter in her ongoing exploration of "textile thinking" and places human interaction at its core.
Visitors become active participants as their movements are detected by an AI-driven LED wall and morphed into hybrid beings, demonstrating how textiles function as transformative and intelligent materials that combine craftsmanship and technology.
The project strongly emphasizes circular and sustainable design. Material highlights include Ohoskin, an Italian textile made from orange by-products that serves as a high-performance alternative to leather, and carpets created from woolen salvages and production remnants by 13RUGS by rohi. Furthermore, a 3D-printed entrance portal is made from ECONYL chips. 'among-all' offers a futuristic vision of interior design where material life cycles are embedded in the creation process.
The Renewable Materials Conference (RMC) 2026 is set to be the premier international meeting point for shaping the future of the renewable carbon economy. Scheduled for September 22–24, 2026, in Siegburg/Cologne, Germany, the event, organized by the nova-Institute, will focus on "Defossilisation through innovation".
Defossilisation—replacing fossil carbon with renewable sources like biomass, direct CO2 utilisation, and recycling—is increasingly recognized as the only viable path to a climate-neutral chemical and plastics sector. With the extraction and use of fossil resources being the largest contributor to human-made climate change, the conference will tackle this critical transformation.
The RMC is expected to gather 400–500 participants from across the globe, including innovators, companies, brands, investors, and policymakers. Attendees are invited to take part in the transformation now, with early bird registration, exhibition and workshop booking, and abstract submissions already open. A key highlight will be the "Renewable Material of the Year 2026" award, for which innovations are currently being accepted.
Vietnam's textile and garment sector, the world's third-largest exporter behind China and Bangladesh, is set for robust expansion, projecting export revenues to hit $46 billion in 2025, representing a solid 5.6% year-on-year increase. This optimism is driven by manufacturers successfully securing orders well into the first quarter of 2026, a clear sign of global brands continuing to diversify sourcing away from China. The United States remains the key driver, expected to contribute $18.6 billion in revenue, an over 11% rise from the previous year, underscoring Vietnam's critical role in the global apparel supply chain.
The crucial green and digital shift
However, this growth trajectory is contingent on addressing significant internal challenges, particularly the pressure to meet increasingly stringent global sustainability standards. To maintain competitiveness, the sector is currently undergoing a "dual transformation": digitalization and greening. Industry leaders, like the Vietnam Textile and Apparel Association (VITAS), emphasize that this transition is mandatory, not optional. Key initiatives include massive investments in AI-powered production lines and Cold-Pad-Batch (CPB) dyeing technology, a greener process that can reduce utility costs by over 70% and lower emissions.
Navigating rising costs and trade policy
Despite its strong export performance, Vietnamese production costs are reportedly 40-45% higher than rivals like Bangladesh, and the country remains heavily dependent on importing up to 95% of its raw materials, including cotton and synthetic fibers. This dependency creates vulnerability, especially under tightening rules of origin within Free Trade Agreements (FTAs) like the EVFTA. Therefore, the strategic focus is on increasing the domestic value-added rate (currently around 52%) and attracting high-tech foreign direct investment to close the local supply chain gaps.
