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The operationalization of the India-Oman Comprehensive Economic Partnership Agreement (CEPA), scheduled in Q1, FY26, is set to eliminate the prevailing 5 per cent import duty on Indian textile and apparel products. This fiscal adjustment provides immediate price competitiveness for Indian exporters, who currently hold the position of the second-largest supplier to Oman, trailing only China. Industry data indicates that India’s textile exports to the Sultanate reached approximately $132 million in 2024. With zero-duty access now covering 98.08 per cent of tariff lines, the Ministry of Commerce anticipates a significant uptick in the shipment of high-demand categories, including home textiles, synthetic yarns, and ready-made garments.
Leveraging Oman as a regional distribution hub
Beyond direct bilateral trade, the agreement facilitates a broader commercial objective: utilizing Oman’s strategic logistics infrastructure to access the wider Gulf Cooperation Council (GCC) and African markets. By capitalizing on the Port of Duqm and integrated free zones, Indian manufacturers can establish re-export centers to mitigate regional supply chain disruptions. The CEPA is not merely about tariff reduction; it is a structural mechanism to integrate Indian apparel clusters into global value chains, notes an official from the Confederation of Indian Textile Industry (CITI). This strategic alignment is essential as India pursues a sector-specific export target of $100 billion by 2030, necessitating a transition from traditional Western markets toward emerging hubs in West Asia.
Addressing competitive hurdles and quality benchmarks
While the CEPA provides a preferential framework, Indian exporters face rigorous competition from low-cost Asian manufacturers and a growing demand for sustainable, high-specification technical textiles within Oman’s expanding hospitality and healthcare sectors. To maximize the agreement’s utility, Indian firms must align production with Oman’s strict regulatory standards and rising consumer preference for eco-friendly materials. Industry analysts suggest, successful execution will depend on capital investments in local Omani distribution networks, ensuring that the initial tariff advantages translate into sustained long-term market share.
India’s textile industry is a cornerstone of the national economy, contributing significantly to industrial output and employment. Traditionally focused on cotton and artisanal products, the sector is now diversifying into technical textiles and man-made fibers. Current growth strategies emphasize high-value apparel and sustainable manufacturing to meet evolving global trade standards.
The restructuring of the Bangladesh textile sector, long one of the world’s most influential garment manufacturing ecosystems has moved far beyond a traditional rivalry between suppliers. What is unfolding instead is a deep and deliberate remapping of Bangladesh’s upstream fibre and fabric sourcing model, and the epicentre of that realignment is China. India, which for decades maintained a commanding presence in yarn supplies, is confronting a challenge that attacks its competitive foundation. In the space of just one year, China has transitioned from being the dominant supplier of synthetics and woven fabrics to becoming Bangladesh’s near-exclusive pipeline for cotton yarn as well. The relationship between the two countries has shifted so dramatically that India’s long-standing edge in yarn now appears newly vulnerable.
China’s embedding in Bangladesh’s textile core
A granular look at Bangladesh Trade and Tariff Commission (BTTC) data reveals the extent of China’s entrenchment. Today, over 80 per cent of Bangladesh’s textile and apparel supply chain is powered directly by Chinese raw materials, technology, or intermediate goods. Nowhere is this dominance more pronounced than in the woven and MMF-driven fabric segment the lifeblood of Bangladesh’s global RMG exports.
By 2024, China had already seized nearly four-fifths of Bangladesh’s total fabric imports, accounting for an extraordinary 78 per cent of inflows. This position was not merely a reflection of low pricing; it represented China’s structural superiority in scale, product diversity, high-performance MMF innovation, and its ability to offer specialty fabrics at speeds unmatched by any other country. For a manufacturing hub like Bangladesh, which relies almost entirely on imports for MMF yarns, technical fabrics, and performance synthetics, China has become more than a supplier it has evolved into a supply-chain enabler.
This near-monopoly reflects the culmination of China’s long-term strategy to dominate higher-value textile inputs. Bangladesh’s woven sector, which underpins the bulk of its over $47 billion RMG exports, is now fundamentally dependent on Chinese upstream capabilities. What was once a multipolar supply structure is turning into a Beijing-centred fibre-to-fabric fortress.
The unravelling of India's yarn dominance
For years, India held the commanding position in Bangladesh’s cotton yarn imports, supplying more than half of its requirements. This leadership rested on reliable quality, shorter transit time, cross-border transport efficiencies, and well-established relationships between Indian spinners and Bangladeshi knitwear units. In 2024, India accounted for 53.66 per cent of Bangladesh’s total yarn imports, giving it a substantial competitive foothold even as China’s fabric dominance grew.
But early 2025 altered the equation almost overnight. A series of trade and political tensions between India and Bangladesh, culminating in border closures and restrictions on land-port yarn shipments, created a vacuum that China filled with clinical speed. By January-February 2025, China had supplanted India outright, capturing 95.61 per cent of Bangladesh’s total yarn imports, while India’s share fell to negligible levels. This was not a marginal transition but a wholesale inversion of the previous year's landscape.
capability to scale up supply rapidly.
Table: India and China’s share in Bangladesh market
|
Segment |
Supplier |
Share in 2024 |
Share in Jan-Feb 2025 |
|
Fabric Imports |
China |
78.46% |
92.26% |
|
India |
8.47% |
Negligible |
|
|
Yarn Imports |
India |
53.66% |
Negligible |
|
China |
37.52% |
95.61% |
Source: Fibre2Fashion's TexPro, BTTC Data (Aggregated and projected figures)
The shift was equally dramatic in the fabric category. China’s already large 78.46 per cent market share in 2024 surged to an overwhelming 92.26 per cent in the early months of 2025. India, which previously held 8.47 per cent in fabrics, ceded virtually the entire space.
The table translates to a stark picture: China did not merely gain share; it assumed full control of both yarn and fabric supply chains simultaneously, across categories where India once held structural advantages.
In fabrics, China expanded from an already dominant 78 per cent in 2024 to over 92 per cent in the first two months of 2025, leaving India’s earlier 8 per cent footprint all but erased. In yarn, the segment traditionally led by India China’s rise from 37.5 per cent in 2024 to nearly 96 per cent in early 2025 reflects a takeover so complete that it redefines competitive baselines. India’s fall from 54 per cent to negligible in the same period underscores how geopolitical disruptions can swiftly cascade into supply-chain reconfigurations.
For India, the lesson is clear: market share built on cost parity and geographic convenience can collapse when policy friction intersects with an aggressive competitor’s willingness to scale up at speed.
Inside the industry shockwave
The ripple effects of Bangladesh's sourcing shift are being acutely felt by Indian textile majors, and Arvind Ltd provides a revealing lens into this disruption. As one of India’s largest integrated textile conglomerates spanning cotton yarn, denim, woven fabrics, and a growing MMF portfolio, Arvind has long benefited from Bangladesh’s proximity and its enormous appetite for Indian cotton yarn.
Arvind’s historical strength lay in premium cotton yarns and high-quality woven fabrics, backed by decades of brand equity and a reputation strengthened through its leadership in denim. Bangladesh, with its huge knitwear export engine, has been central to Arvind’s export volumes.
But the new sourcing realities present a structural challenge. The loss of yarn volumes to China threatens the company’s pricing power and utilization rates both crucial in a global market where spinning margins are already under pressure. Even though Arvind is actively investing in MMF and technical textiles, and shifting its portfolio toward higher-value segments, the immediate impact of losing a major export destination cannot be ignored.
Experts note that the Indian model built on cotton cost competitiveness no longer aligns with global textile evolution. China’s advantage now lies in integrated fibre-to-fabric ecosystems, where synthetics, functional materials, and technical textiles drive the premium end of global apparel. Arvind and its peers must therefore compete not on price alone but through product complexity, innovation, and value-added blends—categories in which China has raced ahead.
India’s counteroffensive
The near-total loss of yarn share has served as an inflection point for India’s textile strategy. Recognizing the depth of the challenge, the government is building a multi-phase roadmap aimed at restoring competitiveness and expanding India’s T&A exports from roughly $40 billion to $100 billion by 2030.
Much of this plan revolves around structural cost correction. Raw material prices, taxation layers, transportation inefficiencies, and power costs are under scrutiny as India works to level the playing field with both China and Bangladesh. Parallelly, India is fast-tracking FTAs with the EU and UK markets where Bangladesh currently enjoys duty-free access due to its LDC status, a benefit that will diminish as Bangladesh graduates in the coming years.
The cornerstone of India’s long-term strategy, however, is the shift toward MMF and technical textiles. Under the PLI scheme, India aims to build domestic capacity in these future-forward categories, reducing reliance on cotton-centric production and enabling the industry to join the global transition toward performance synthetics, recycled fibres, and engineered textile solutions.
This shift is essential not only for competitiveness but also for rebalancing India’s export portfolio. A diversified fibre mix will insulate the sector from cotton price volatility and ensure it competes in the same product spaces where China has achieved dominance.
A new vulnerability for Bangladesh
While China’s rapid expansion into Bangladesh’s textile inputs gives it unparalleled leverage, it also exposes Bangladesh to long-term risk. A supply chain over-concentrated in one country is inherently fragile. Any disruption, from geopolitical tension to freight escalation or environmental regulation could destabilize Bangladesh’s production pipeline.
For India, the moment calls for a decisive realignment. Rebuilding trust with Bangladesh, removing non-tariff obstacles, restoring multi-modal connectivity, and accelerating MMF investments are no longer optional. They are critical steps if India is to reclaim lost ground and transition from a cotton-dominated supplier to a future-ready textile power. Bangladesh’s shift has delivered a clear message to India: the global textile hierarchy is being reshaped not by costs alone but by speed, fibre innovation, and integrated ecosystems. China understood this early. India must now catch up fast.
The passing of Valentino Garavani at age 93 in Rome on January 19, 2026, marks the definitive conclusion of the golden age of haute couture. While the industry mourns a maestro who commanded the global red carpet for five decades, the news arrives at a critical juncture for his eponymous fashion house. Valentino’s departure coincides with a volatile luxury climate where heritage brands are undergoing intense structural scrutiny. In late 2025, shareholders amended key agreements to postpone Kering’s potential full buyout of the brand until at least 2028, reflecting a cautious stance as the sector faces a ‘luxury slowdown.’ The house reported a 22 per cent drop in profitability in its most recent fiscal cycle, highlighting the challenge of maintaining Garavani’s ‘eternal elegance’ in a market increasingly dictated by data-driven digital scaling rather than pure artisanal mystique.
Strategic continuity amidst aesthetic shifts
Maison Valentino is currently navigating a high-stakes creative transition under Alessandro Michele, whose baroque maximalism represents a departure from the founder’s classicist silhouettes. This aesthetic reset is more than a stylistic choice; it is a commercial mandate to recapture the attention of high-net-worth Gen Z consumers. ‘Luxury is no longer just about the product; it is about cultural legitimacy,’ noted an industry analyst regarding the 2026 outlook. Despite stagnant growth in traditional markets, Valentino’s online sector saw a 5 per cent increase, now accounting for 70 per cent of direct-to-consumer interactions. The brand's survival strategy hinges on ‘unified commerce’ - bridging the gap between Garavani’s historic Roman atelier and a hyper-efficient global supply chain.
Maison Valentino is a premier Italian luxury house specializing in haute couture, ready-to-wear, and leather goods. Majority-owned by the Qatari fund Mayhoola with a strategic 30 per cent stake held by Kering, the company operates 287 stores globally. Following a fiscal 2024 revenue of €1.31 billion, the brand is prioritizing direct-to-consumer growth and a refreshed creative vision to stabilize its financial trajectory through 2029.
The global licensed sports merchandise market is projected to hit $44.92 billion in 2026, yet this top-line growth masks a brutal winnowing of traditional storefronts. While consumer appetite for team-branded apparel remains robust, the ‘fan experience’ has fundamentally decoupled from the local mall. Modern retail experts note, specialty chains are entering a ‘flight to profitability’ where high interest rates and the expiration of legacy leases are forcing overleveraged players into Chapter 11. Unlike the liquidations of the past decade, today’s bankruptcies are increasingly surgical- aimed at shedding physical footprints to re-emerge as nimble, digital-first entities.
The rise of high-performance omnichannel models
Success in the current climate is no longer defined by shelf space but by ‘unified commerce.’ Industry leaders like Fanatics and Lids have set a high bar, utilizing real-time inventory synchronization to bridge the gap between social media ‘drops’ and in-store pickups. For regional survivors, the challenge is an escalating ‘tech tax.’ Forrester analysts predict a wave of specialty retail bankruptcies this year as companies fail to fund the AI-driven personalization and moisture-wicking fabric innovations that 2026 consumers demand. ‘The margin for error has vanished,’ says one retail strategist. ‘If you aren't integrating augmented reality try-ons or sustainable 'circular fanwear' initiatives, you are essentially managing a decline.’
A century-old institution, Modell's Sporting Goods serves as a primary case study for the sector's evolution. Originally a dominant physical force in the Northeast US, the brand now operates under Omni Retail Enterprises as a high-growth e-commerce platform. While its historical identity was rooted in 150+ ‘hometown’ stores, its 2026 outlook focuses on a lean, data-driven digital model with targeted ‘experiential’ brick-and-mortar returns planned for key metropolitan hubs.
The recent Chapter 11 filing by Shoshanah Fashions, Inc in Massachusetts underscores a tightening liquidity crisis facing independent apparel firms in 2026. While larger conglomerates leverage economies of scale to absorb rising operational costs, boutique entities are increasingly vulnerable to the ‘silent squeeze’ of persistent inflation and high-interest debt. This voluntary petition, reporting liabilities up to $1 million, reflects a broader systemic fragility within the regional fashion sector. Analysts note, smaller retailers are struggling to maintain competitive inventory cycles as consumer spending shifts toward value-oriented ‘dupe’ brands and high-end luxury, leaving mid-tier boutique players in a precarious financial position.
Strategic reorganization amid sector volatility
Coinciding with the high-profile insolvency of Saks Global, the Shoshanah Fashions filing suggests a synchronized stress point across the retail spectrum. For smaller enterprises, Chapter 11 is no longer just a precursor to liquidation but a tactical necessity to renegotiate burdensome commercial leases that have become unsustainable in a post-pandemic real estate market. ‘The threshold for survival has shifted from mere sales volume to extreme capital efficiency,’ states a Boston-based retail restructuring expert. As the company navigates its 1-49 creditors, the primary challenge remains balancing debt servicing with the necessity of digital infrastructure investment, an area where boutique firms often lag behind venture-backed competitors.
A Massachusetts-based apparel entity, Shoshanah Fashions specializes in curated women’s boutique fashion and accessories. Historically focused on the Northeast regional market, the company seeks to stabilize its financial performance through debt restructuring following a period of stagnant brick-and-mortar traffic. Current growth initiatives are concentrated on a digital-first reorganization plan to improve long-term solvency.
The European fashion industry is entering a period of extreme volatility as US President Donald Trump leverages trade policy to pressure NATO allies over the purchase of Greenland. On January 17, 2026, the administration announced a 10 per cent blanket tariff on all goods from Denmark, France, Italy, and the UK, effective February 1, with a scheduled escalation to 25 per cent by June if a deal is not reached. For a sector already reeling from a 22 per cent profitability dip in 2025, these levies threaten to sever the ‘luxury lifeline’ that American consumers provide. Industry data indicates, EU textile and fashion exports to the US are valued at approximately €7.4 billion ($8.6 billion) annually.
Margin erosion and the ‘Big Bazooka’ retaliation
The fiscal impact is immediate. Retailers such as LVMH and Kering, which derive nearly 25 per cent of their revenue from the US, face a stark choice between absorbing the tariff costs or passing a 15 per cent to 20 per cent price hike to consumers. The margin for error has vanished; we are looking at a potential 0.5 per cent contraction in EU GDP solely due to these trade frictions, noted a lead economist at Business Europe. In response, Brussels is weighing the deployment of its ‘Anti-Coercion Instrument’ - the so-called Big Bazooka - which could see retaliatory duties on US tech and agricultural giants. This ‘tit-for-tat’ spiral threatens to decouple the Transatlantic fashion market just as brands began stabilizing post-inflation.
European fashion remains a primary GDP driver for Italy (5.1 per cent) and France (3.1 per cent), anchored by high-end leather goods and haute couture. In 2026, the sector is prioritizing supply chain ‘de-risking’ by shifting focus to the Middle East and Asian markets. Reorganization plans center on unified commerce to offset physical retail losses caused by rising Transatlantic trade barriers.
As of January 2026, the global polyester fiber market has reached a valuation of $145.03 billion, signaling a fundamental shift in textile economics. While the sector is projected to expand to $274.58 billion by 2035, the primary driver is no longer just volume but ‘material integrity.’ Manufacturers are facing a ‘tech tax’ to balance cost-efficiency with emerging European and North American regulations on circularity. Industry leaders are moving beyond simple bottle-to-fiber recycling—which currently accounts for roughly 13 per cent of the market- to advanced chemical recycling that preserves fiber strength. ‘The industry is transitioning from a commodity-based model to one of high-spec functional polymers,’ noted a lead researcher at Precedence Research.
Overcoming the ‘Microfiber Barrier’ through Bio-Science
The 2026 apparel landscape is defined by the integration of AI-optimized molecular engineering to mitigate environmental drawbacks. Despite the 7.35 per cent value CAGR, the sector faces significant headwinds from microplastic pollution studies, which indicate that recycled polyester can shed up to 55 per cent more microfibers than virgin equivalents. To counter this, Tier I producers like Indorama Ventures and Reliance Industries are investing in ‘anti-shed’ coating technologies and bio-based feedstocks derived from fermented sugars. These innovations are critical for the Asia Pacific region, which maintains a 72 per cent volume share, as it seeks to protect its export dominance against increasingly stringent global sustainability standards.
The polyester fiber industry produces essential polymers for apparel, automotive interiors, and industrial textiles. Dominating 57 per cent of global fiber production, the sector is currently scaling recycled PET (rPET) and bio-based alternatives to meet 2030 net-zero targets. With high growth in India and China, the market is shifting toward specialized, high-tenacity filaments for the vehicle electrification and technical textile sectors.
In a rare joint display of alarm, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the BKMEA have formally challenged the interim government's move to suspend duty-free yarn imports. At a press conference in Dhaka on January 19, 2026, industry heads described the decision as a ‘death warrant’ for the Ready-Made Garment (RMG) sector, which accounts for 84 per cent of national export earnings. The policy shift, which could push effective tax burdens on imported yarn as high as 40 per cent, comes as the sector faces a ‘perfect storm’ of challenges. Between July and December 2025, apparel exports already contracted by 2.63 per cent, with a staggering 14.23 per cent plunge in December alone. The garment sector is now in the ICU, warned Mohammad Hatem, President, BKMEA noting, domestic spinning mills are currently charging a premium of $0.40 to $0.60 per kilogram over international prices.
WTO compliance and competitive erosion
The trade bodies contend that the imposition of these duties violates the World Trade Organization’s (WTO) Safeguard Agreement, which mandates a transparent investigation to prove ‘serious injury’ to domestic industry before protective tariffs are applied. For Bangladesh’s $27 billion knitwear segment, the stakes are existential. Exporters argue, local spinning mills lack the capacity to supply the specialized high-count yarns required for the premium market shift planned for 2026. This cost escalation threatens to drive international buyers toward competitors like Vietnam, which recently secured zero-duty access to major global markets via its latest Free Trade Agreements. Rather than import barriers, apparel leaders are urging the government to stabilize the primary textile sector through direct cash incentives and a reliable energy supply to prevent a total supply chain collapse.
The BGMEA and BKMEA are the apex trade bodies representing Bangladesh’s multi-billion dollar apparel sector. They manage global buyer relations and labor compliance for thousands of factories. Following a 14 per cent export dip in late 2025, their 2026 strategy focuses on LDC graduation readiness and diversifying into high-value technical textiles and non-traditional markets like Australia and the UAE.
The US House of Representatives has passed three-year extensions for the African Growth and Opportunity Act (AGOA) and the Haiti Economic Lift Program (HELP). On January 12, 2026, lawmakers voted 340-54 for the AGOA Extension Act and 345-45 for the HELP Extension Act, providing a legislative bridge through December 31, 2028. The move is specifically designed to halt the flight of apparel manufacturing from sub-Saharan Africa and Haiti following the programs' expiration on September 30, 2025, which had temporarily exposed exports to duties ranging from 10 per cent to 30 per cent.
Retroactive relief and nearshoring strategic value
A vital commercial provision of the new legislation is its retroactivity, allowing U.S. importers to claim refunds on duties paid during the four-month lapse. For the Haitian textile sector, which supports over 10,000 formal jobs, the extension of the HELP Act maintains duty-free rules for apparel regardless of yarn origin. Beth Hughes, Vice President of Trade at the American Apparel & Footwear Association (AAFA), noted that these programs are essential for ‘diversified sourcing goals’ and provide a counterweight to regional instability. By stabilizing these trade corridors, the US aims to protect nearshoring investments and prevent a ‘sourcing void’ that rival global powers are eager to fill.
Navigating the ‘Third-Country Fabric’ renewal
The legislation crucially preserves the ‘third-country fabric’ provision, a cornerstone for lesser-developed beneficiary countries like Kenya, Lesotho, and Madagascar. This rule allows manufacturers to source globally competitive yarns while retaining duty-free access to the U.S. market - a necessity for industries that lack vertical integration. While the three-year window is shorter than the 10-year renewal industry leaders sought, it provides the ‘predictability and certainty’ required for 2026 production cycles. Analysts suggest the extension also serves as leverage for the Trump administration to negotiate higher reciprocity, particularly with major partners like South Africa, whose eligibility remains under active review.
AGOA provides duty-free access for over 6,500 products from 32 eligible African nations. It mainly benefits the textiles and apparel industry. The extension aims to recover the 8 per cent export dip seen during the 2025 lapse. Enacted in 2000 (AGOA) and 2010 (HELP) to shift bilateral relations from aid to commerce.
In a decisive move against the rising tide of global protectionism, the European Union and the Mercosur bloc officially signed their long-awaited partnership and interim trade agreements in Asunción, Paraguay, on January 17, 2026. This landmark ceremony caps over 25 years of negotiations, establishing one of the world’s largest free-trade zones by connecting over 700 million consumers. For European industry, the timing is critical; as traditional trade corridors face volatility, this pact provides a stable, rules-based framework expected to add €77.6 billion to the EU’s GDP by 2040.
Dismantling barriers in high-value industrial segments
The agreement’s primary commercial impact lies in the sweeping elimination of duties on more than 90 per cent of EU exports. Industrial sectors that have long struggled against steep South American protectionist walls are the most immediate beneficiaries. Currently, Mercosur imposes a prohibitive 35 per cent tariff on European clothing, textiles, and footwear - barriers that will be phased out to zero under the new deal. This structural shift is projected to trigger a 39 per cent rise in EU exports to the region, allowing specialized European manufacturers to compete on a level playing field for the first time in decades.
Strategic diversification of supply chains
Beyond market access, the alliance serves as a strategic bulwark for European supply chain security. By securing preferential access to essential raw materials and critical minerals from Argentina and Brazil, the EU is effectively diversifying its sourcing away from over-dependence on a single dominant supplier. For the apparel and textile confederations, like Euratex, the deal facilitates a more resilient ‘proximity-neutral’ sourcing strategy for cotton and cellulose-based fibers. This integration is increasingly vital as European firms navigate the transition toward circular economy mandates and carbon-neutral production.
Navigating the final hurdles of ratification
While the signing marks a geopolitical victory, the narrative now shifts to the European Parliament for final consent. The ‘Interim Trade Agreement’ is designed to allow immediate market access and tariff reductions once Parliament approves, bypassing the longer process required for the full Partnership Agreement. However, the path remains complex; while industrial bodies celebrate the growth prospects, agricultural sectors in France and Ireland continue to voice concerns over import surges. The European Commission has responded with a €6.3 billion agricultural safeguard fund, ensuring that the transition toward this new trade equilibrium does not compromise domestic food security standards.
The agreement creates a trans-Atlantic marketplace involving 10 per cent of the world's population and a combined GDP of $22 trillion. It aims to harmonize regulatory standards while ensuring strict adherence to the Paris Agreement on climate change.
The EU is already Mercosur’s second-largest goods partner, with bilateral trade exceeding €111 billion in 2024. Full implementation of this agreement will eliminate approximately €4.5 billion in annual export duties, specifically empowering the 30,000 European SMEs currently active in the South American market.
