FW
By early 2026, the mood across India’s home textile clusters, from Panipat’s terry towel hubs to Ichalkaranji’s spinning belts and Gujarat’s bed linen exporters has changed from defensive survival to cautious expansion. The catalyst is neither a new subsidy nor a domestic policy reform. It is a diplomatic breakthrough.
The new US-India bilateral trade agreement has slashed cumulative duties on Indian home textile shipments to the US from 50 per cent to 18 per cent. The rollback includes the scrapping of a 25 per cent punitive surcharge previously tied to energy sourcing and geopolitical compliance issues. For exporters who spent much of 2025 absorbing costs to avoid losing shelf space at American retailers, the change feels less like a concession and more like oxygen.
With the US accounting for nearly half of India’s home textile exports, the tariff cut effectively rewrites the sector’s economics overnight. Margins are reappearing. Order pipelines are reopening. And capacity utilisation is climbing back toward pre-2024 levels. In short, India’s export engine has got a respite.
From cost disadvantage to competitive edge
The most immediate impact of the tariff revision is mathematical. At 50 per cent, Indian products were simply unviable for US buyers unless suppliers sacrificed profits. Several clusters reported production drops of 30-70 per cent last year as orders shifted to Vietnam, Bangladesh, and Pakistan. At 18 per cent, the same products are suddenly cheaper than most Asian alternatives.
This rate not only restores parity but gives India a measurable edge across categories like bed linen, towels and cotton-rich home furnishings. For big-box chains such as Walmart, Target and IKEA, where pennies determine sourcing decisions an 18 per cent duty moves Indian goods back into the ‘automatic buy’ bracket. The result is a rapid rebalancing of sourcing strategies under the ongoing China Plus One strategy.
Asia’s sourcing chessboard gets rearranged
The tariff reset doesn’t operate in isolation. It changes the competitive hierarchy across Asia. The comparative tariff structure tells the story.
Table: Global home textile export dynamics (2026)
|
Country |
Effective US tariff (Feb 2026) |
Primary competitive segment |
2025 Export growth to US |
Strategy/Outlook |
|
India |
18% |
Bed Linen, Terry Towels |
+11.8% |
Tariff reset; regaining margins and volume. |
|
Pakistan |
18.20% |
Budget Bedding, Cotton Yarn |
+14.7% |
Competitive on price; struggling with energy costs. |
|
Vietnam |
20% |
Synthetic Blends, Upholstery |
+18.5% |
Strong manufacturing base; slightly higher duty. |
|
Bangladesh |
20% |
Knitwear, Basic Linens |
+24.3% |
Rapidly scaling; infrastructure challenges persist. |
|
China |
30-35% |
Curtains, Technical Textiles |
-16.20% |
Losing market share due to high punitive duties. |
|
Turkey |
10-30% (Variable) |
Premium Rugs, Organic Fabrics |
+7.9% |
Focus on high-value and nearby regional markets. |
Read closely, the numbers reveal three shifts. First, India now holds the lowest stable tariff among high-volume suppliers. Even the seemingly small difference between 18 and 20 per cent translates into millions of dollars across bulk programs. Second, China’s decline continues. A negative growth rate alongside 30-35 per cent duties confirms that US buyers are permanently diversifying away from Chinese sourcing.
Third, Pakistan’s traditional price advantage in basic bedding has been neutralised. At 18.2 per cent, it no longer enjoys a tariff cushion over India, leaving operational efficiency not duty arbitrage as the deciding factor. In effect, the US market has tilted back in India’s favour.
Margins return, balance sheets breathe
During the high-tariff year of 2025, many Indian exporters quietly absorbed 6-10 percentage points of cost increases to retain customers. EBITDA margins compressed, working capital ballooned, and capacity expansions were shelved. Now that pressure is easing. Analysts project margin recoveries of 200-400 basis points by FY27 as companies regain pricing power and restore normal contract structures.
This is not merely incremental improvement. For a sector that typically operates in low-to-mid teen margins, a 300-basis-point swing can transform return ratios and fund fresh capex. The biggest beneficiaries are the industry’s established leaders.
Inside the export heavyweights
Indo Count: Indo Count has quietly evolved from a contract manufacturer into a branded player. With an annual capacity of 153 million meters of bed linen and roughly 70 per cent of revenue tied to the US, the company is uniquely exposed to tariff movements. The new duty structure does two things simultaneously: it restores order visibility and protects margins on its recently acquired premium brand, Wamsutta.
Its greenfield North Carolina facility adds an onshore fulfilment capability, reducing delivery timelines for American retailers. That combination of Indian manufacturing efficiency plus US proximity positions Indo Count to win higher-value contracts rather than just bulk volumes.
Welspun Living: Welspun remains the dominant terry towel supplier to the US. About 61 per cent of its exports depend on America, but its vertically integrated farm-to-shelf structure shields it from cotton price shocks and freight volatility. The company’s Ohio and Nevada operations represent a deliberate near-shoring strategy, helping customers hedge geopolitical and logistical risks.
Management’s ambition of Rs 15,000 crore in revenue with mid-teen margins now looks achievable, not aspirational, thanks to the tariff tailwind.
Trident: Trident’s diversified portfolio of towels, yarn and paper makes it less glamorous but strategically resilient. With more than 80 per cent of textile output exported, even small duty reductions meaningfully impact profitability. The company struggled during 2025’s high-cost regime, but its conservative balance sheet, including a low 0.3x debt-to-equity ratio, allows aggressive capacity expansion just as order books begin filling again. For Trident, the trade thaw is less about survival and more about reclaiming utilisation.
Table: India’s home textile leaders
|
Metric (Feb 2026) |
Indo Count |
Welspun Living |
Trident Ltd |
|
US Revenue Exposure |
70% |
61% |
~65% (Textile Div) |
|
Key Product Focus |
Bed Linen / Branded |
Terry Towels / Flooring |
Towels / Yarn / Paper |
|
Tariff Advantage vs China |
+12% to 17% |
+12% to 17% |
+12% to 17% |
|
ROCE (%) |
13.50% |
14.40% |
9.50% |
The table illustrates why the tariff shift matters differently for each firm. Indo Count’s heavy US exposure makes it the most sensitive and therefore the biggest winner. Welspun’s higher ROCE reflects operational efficiency and integration. Trident’s lower returns highlight room for improvement, but also upside if utilisation climbs. Across all three, however, the tariff differential versus China provides a structural moat.
The broader export renaissance
The bigger story extends beyond one bilateral agreement. India’s home textile industry has gradually moved up the value chain from yarn exports to finished, design-led, branded products. Today, the segment contributes roughly 12 per cent of India’s overall exports. With trade negotiations advancing with the UK and EU and new FTAs expected by 2027, exporters anticipate a second wave of duty relief across Europe. If the US reset marks the first chapter, Europe could be the sequel. That combination would effectively anchor India as the default global sourcing hub for home textiles.
The fact is even though trade agreements rarely feel tangible on factory floors. This one does machines that went idle last year are restarting. Inventory cycles are normalising. And exporters are once again talking about expansion, not contraction. An 18 per cent tariff may sound like a technical statistic. In practice, it represents something much bigger: the restoration of competitiveness. For India’s home textile makers, the message from Washington is clear the door is open again. And this time, they intend to walk through it at full scale.
The Indian textile and apparel sector has entered a high-stakes transition period this February following the formalization of the India-US Interim Trade Agreement. By reducing reciprocal tariffs from a punitive 50 per cent to a more sustainable 18 per cent, Washington has significantly altered the competitive math for global sourcing. While regional rivals like Bangladesh and Vietnam operate under 20 per cent duties, and China faces a steep 34 per cent barrier, Indian manufacturers are witnessing an immediate revival of stalled orders. Industry veteran Rajeev Gupta, Joint Managing Director, RSWM, confirms, this 32-percentage-point reduction provides a decisive cost advantage, particularly as the US accounts for nearly 28 per cent of India's total textile exports.
Legislative disruption and the small-parcel shift
This tariff relief arrives as a critical counterweight to the structural ‘de minimis’ disruption. The US House of Representatives is currently debating a new bill to partially restore simplified customs treatment for low-value parcels after the total removal of the Section 321 exemption in late 2025. This regulatory volatility has forced large-scale players to abandon high-burn direct-to-consumer models. A notable case is Trident Ltd, which recently divested its digital retail arm, mytrident.com, to focus on industrial scaling. This move aligns with the Union Budget 2026–27 focus on mega textile parks, allowing companies to consolidate production in "plug-and-play" facilities to offset the 44.7 per cent contraction in net profits reported during the high-tariff Q3 FY26 period.
Vertical integration as a hedge against volatility
To secure long-term margins, exporters are doubling down on vertical integration and the National Fiber Scheme. By sourcing up to 55 per cent of yarn internally, companies like Trident are better positioned to navigate the ‘softer’ global cotton outlook and rising logistics costs. The government’s PM MITRA parks and modernized skilling programs aim to sustain the livelihoods of 4.5 crore textile workers while positioning India as the primary, resilient alternative to non-market economies. As standard ad valorem duties replace flat fees for postal shipments by late February, the industry's shift toward large-scale, high-value brand partnerships is no longer optional - it is the baseline for survival.
A leading vertically integrated manufacturer of yarn, home textiles, and eco-friendly paper, Trident is a dominant supplier to major US retailers including Walmart and IKEA. The group is currently executing a Rs 3,000 crore capacity expansion to capitalize on new trade deals. Despite recent profit dips, its 9-month FY26 performance remains resilient with a 16 per cent Y-o-Y profit increase.
The American textile manufacturing sector has signaled a unified front in support of the Last Sale Valuation Act, a bipartisan bill introduced by Senators Bill Cassidy (R-LA) and Sheldon Whitehouse (D-RI). This legislation marks a potential end to the nearly 40-year-old ‘First Sale’ rule, a customs valuation method that has allowed importers to pay duties based on the price paid to a manufacturer in a multi-tier supply chain, rather than the typically higher price paid by the final US importer. For domestic producers, the move represents a critical attempt to restore competitive parity in a market where shipments reached $63.9 billion last year but have been increasingly undercut by offshore ‘tariff mitigation’ strategies.
Ending valuation advantages for multi-tier global supply chains
At the heart of the debate is the transition from a ‘First Sale’ to a ‘Last Sale’ valuation standard. Under current practices, sophisticated global retailers often use middleman trading companies to artificially lower the declared customs value of imported apparel, effectively diluting the impact of US tariffs. By requiring duties to be assessed on the bona fide transaction value just prior to exportation, the bill aims to close a loophole that domestic advocates argue has drained federal revenue and incentivized predatory trade practices. Kim Glas, President and CEO, National Council of Textile Organizations (NCTO), emphasized, closing this gap is essential to leveling a playing field that currently disadvantages the 471,046 American workers employed across the textile supply chain.
Strategic realignment and the shift towards onshoring
The introduction of the Last Sale Valuation Act follows a series of aggressive trade maneuvers in early 2026, including the formal closure of the de minimis exemption and the announcement of new reciprocal trade deals with Western Hemisphere partners like Guatemala and El Salvador. Industry analysts view this latest bill as part of a broader ‘reshoring’ strategy intended to curb the dominance of non-market economies. While some importing coalitions warn of potential inflationary pressure on consumer apparel prices, the domestic industry contends that the reform will spur long-term capital investment. With US textile exports totaling $28 billion in 2024, the NCTO maintains that securing the home market from valuation fraud is the only way to ensure the viability of the $2.98 billion in capital expenditures recently injected into domestic production facilities.
NCTO is a Washington-based trade association representing the entire spectrum of the U.S. textile industry, from fiber and yarn producers to finished sewn product manufacturers. It serves as the primary legislative voice for domestic mills against global trade disparities. Representing a sector with over $60 billion in annual shipments, NCTO is currently focused on a 2030 strategy to integrate AI-driven manufacturing and secure military procurement through the Berry Amendment. Historically, the organization has been the vanguard in litigating against ‘triple-transformation’ loopholes in free trade agreements.
Thailand is consolidating its status as the premier commercial nexus for the Asian textile sector. Following a high-profile press conference in Bangkok on February 11, CEMS-Global USA officially announced the 2nd Asia Sourcing Show 2026 and the inaugural Global Sourcing Summit, scheduled for June 3–5 at the IMPACT Exhibition & Convention Center. This initiative arrives as the $1.7 trillion global apparel industry faces a structural overhaul driven by nearshoring, rising tariffs, and a transition toward regional trade blocs. By convening manufacturers from across South and Southeast Asia, Thailand is moving beyond its traditional manufacturing role to become a comprehensive ‘one-stop’ marketplace for international buyers from Europe and North America.
Technological integration and the rise of functional textiles
The upcoming exhibition, which incorporates specialized shows for apparel, yarn, and fabric, highlights a significant technical transition within the Thai market. Large, vertically integrated mills are increasingly adopting automated looms and AI-driven demand forecasting, which have already demonstrated a 12–15 per cent reduction in fabric waste. According to industry data, Thailand’s textile market - estimated at $4.97 billion in 2026 - is aggressively shifting from volume-based commodities to high-margin technical and functional textiles. These innovations, ranging from antibacterial medical fabrics to flame-resistant industrial materials, are expected to contribute approximately $1 billion to the sector’s valuation by 2031, offsetting the competitive pressure from lower-cost neighbors.
Sustainability and regional collaboration via the BCG Model
A central theme of the 2026 summit is the Bio-Circular-Green (BCG) Model, a government-backed framework designed to synchronize Thai wisdom with modern sustainable practices. With the global sustainable textile market projected to reach $9.5 billion, Thailand is leveraging its domestic petrochemical corridors in Rayong and Chonburi to shorten raw-material lead times for recycled polyester and viscose. Dr. Chanchai Sirikasemlert, Executive Director of the Thailand Textile Institute (THTI), noted that establishing this global platform is essential for elevating Thai brands onto the world stage. By fostering cross-border partnerships through the ASEAN Federation of Textile Industries (AFTEX), the event aims to build a resilient supply chain that prioritizes transparency and environmental compliance over pure cost-efficiency.
The Thailand Textile Institute (THTI) is the primary organization responsible for enhancing the competitiveness of the Thai textile and apparel industry. It focuses on research, quality standard certification, and the promotion of high-value technical textiles for the medical and automotive sectors. THTI is currently overseeing a government-supported modernization plan involving a $250 million investment in innovation.
South India’s premier integrated textile marketplace, Texvalley has initiated a major expansion phase by inviting franchisees and investors for its upcoming ‘Fortune City’ project in Erode. Following a high-profile investor meet on February 11, 2026, the development has secured interest from major national conglomerates including Aditya Birla Fashion & Retail, Reliance Group, and Trent. This initiative marks a decisive shift from a pure-play B2B wholesale model toward a comprehensive ‘Value Mall’ ecosystem, designed to capture the rising disposable income in the Kongu region.
Data-driven repositioning to modernize apparel retail
The 20-lakh-sq.-ft. destination is undergoing a structured transformation to align with the projected 10.5 per cent revenue growth in the Indian apparel sector for FY26. By integrating large-format ‘Big Box’ retail and digital manufacturing workflows, Texvalley aims to serve a consumption catchment of over 60 lakh consumers. The depth of investor engagement reflects growing confidence in organized retail within Tier-2 growth centers, states Kabilan Devarajan, Managing Director, URC Group. The facility is expected to double its employment impact to 4,000 personnel by the end of FY27, positioning Erode as a central node for regional retail tourism.
Operational challenges amidst infrastructure expansion
Despite strong interest, the project navigates a competitive landscape where capital expenditure for large-scale textile parks remains high. However, Texvalley’s strategic location on the Bengaluru–Cochin National Highway provides a logistical advantage, mitigating supply chain bottlenecks for the 100+ brands already operational. Analysts suggest that the platform’s focus on ‘sustainability-ready’ infrastructure will be a key differentiator as international buyers increasingly demand eco-certified sourcing hubs in Southern India.
Promoted by the Lotus and URC Groups, Texvalley is a massive 20-lakh-sq.-ft. integrated marketplace specializing in B2B textile trade and B2C retail. Based in Erode, it serves global apparel markets through its Global Market and Value Mall segments. With a 15-year vision plan, the company is scaling toward a premier lifestyle destination status, underpinned by robust growth in India’s fast-fashion consumption.
As of February 2026, the global apparel supply chain is undergoing a structural reset, and PDS Limited is positioning itself at the center of this transition. Reporting its Q3 FY26 financial results, the global fashion infrastructure platform revealed a strategic shift toward high-efficiency manufacturing and design-led sourcing.
Despite a cautious global consumer environment, the company saw its Gross Merchandise Value (GMV) climb 6 per cent to Rs 4,660 crore in the quarter ended December 31, 2025. This growth arrives at a pivotal moment as the industry navigates the expiration of the US ‘de minimis’ exemption and the onset of new India-US Interim Trade Agreement, which recently saw textile tariffs drop from 50 per cent to 18 per cent. bilateral trade frameworks.
Aggressive deleveraging and operational efficiency drive resiliency
The most significant material development in PDS’s latest filing is a radical optimization of its balance sheet. The company slashed its net debt from Rs 374 crore in March 2025 to just Rs 70 crore by December - a reduction of over 80 per cent in just nine months. This fiscal discipline was boosted by a sharp contraction in net working capital days, which fell from 17 to 7 days.
According to Sanjay Jain, Group CEO, the firm is currently executing a BCG-led cost transformation program to streamline underperforming verticals and enhance long-term profitability, particularly as retailers shift toward shorter order visibility and more frequent, smaller-batch inventory cycles.
Strategic acquisitions to capitalize on new trade corridors
PDS is aggressively retooling its sourcing footprint to benefit from the India-US Interim Trade Agreement, which recently saw textile tariffs drop from 50 per cent to 18 per cent. Central to this strategy is the recent acquisition of Knit Gallery, a Tirupur-based manufacturing specialist. This facility serves as a primary hub for capturing duty-free and reduced-tariff opportunities under the newly ratified India-EU and UK Free Trade Agreements. Pallak Seth, Executive Vice Chairman noted, the company’s diversified operations across India, Bangladesh, and Vietnam are designed to hedge against geopolitical volatility, providing global brands like TJ Maxx and Primark a stable, compliant ‘plug-and-play’ infrastructure amidst shifting regional trade loyalties.
Navigating margin pressures with design-led sourcing
While topline revenue grew 2 per cent this quarter, the company faced a 18 per cent decline in Profit After Tax (PAT), reflecting the high costs of operational realignments and the ‘Pillar II’ global minimum tax impact. To counter these headwinds, PDS is shifting its focus toward high-margin design-led sourcing, which saw significant traction this year. By integrating AI-driven design tools and localizing production close to raw material hubs, the firm aims to offset rising logistics costs. With an order book of Rs 5,179 crore, the company is betting that its transformation from a traditional sourcing house to a technology-enabled infrastructure platform will provide the necessary scale to survive a year defined by ‘uneven stabilization’ in Western retail markets.
The European textile and fashion sector has joined a coalition of industrial leaders to demand a robust emergency rescue package from the European Union, warning, the region's manufacturing core is reaching a breaking point. During the European Industry Summit held in Antwerp on February 11, 2026, Euratex - representing 200,000 companies and 1.3 million workers - officially aligned with the Antwerp Declaration Community. The group is pressuring EU Heads of State to implement immediate measures within the current calendar year to counteract a deepening competitiveness crisis fueled by prohibitive energy costs and a surge in unregulated imports.
Countering the influx of non-compliant goods through market surveillance
A primary grievance shared by industry stakeholders involves the unchecked entry of millions of low-quality, non-compliant products into the EU via global online platforms. These imports frequently bypass the rigorous environmental and safety standards imposed on domestic manufacturers, effectively subsidizing unfair competition. Mario Jorge Machado, President, Euratex argued, European producers are being undermined by a lack of enforcement, calling for aggressive market surveillance to sanitize the internal market. The industry is specifically advocating for a transition from high-level political announcements to tangible delivery, ensuring that any product sold within the EU, regardless of origin, adheres to the same sustainability and labor transparency benchmarks.
Reshaping public procurement to prioritize strategic autonomy
Beyond trade enforcement, the sector is pushing for a fundamental overhaul of how public institutions purchase textiles. The proposed strategy urges a shift in public procurement criteria to look beyond the lowest price, instead prioritizing regional origin, security of supply, and environmental footprints. This is particularly critical for ‘strategic textiles’ used in defense, medical, and automotive applications, where Europe seeks to maintain technological sovereignty. By utilizing procurement as a tool to stimulate demand for high-quality, EU-made fabrics, leaders believe they can stabilize the manufacturing base and protect the million-plus livelihoods currently threatened by market volatility.
Bridging carbon costs and global trade parity
The summit highlighted the urgent need to reconcile Europe’s ambitious climate goals with the commercial reality of global trade. Industry leaders, including representatives from major economies like Germany and France, discussed a coordinated package aimed at reducing carbon and energy costs to prevent further industrial flight. The textile ecosystem is currently caught between the high costs of decarbonization and a global market that does not always reward sustainable practices. The Antwerp Declaration Community maintains that without strong trade instruments to ensure a level playing field, the EU risks losing its capacity to produce the very technical and sustainable textiles required for its own green transition.
Euratex acts as the chief advocate for the European textile and apparel industry in Brussels, representing a diverse network ranging from luxury fashion houses to technical textile producers. The organization is currently spearheading the transition toward a circular textile economy, focusing on high-performance materials for the automotive, medical, and aerospace sectors. Historically, the industry has pivoted from mass-market apparel to high-value technical textiles, though it now faces unprecedented pressure from rising operational costs and global geopolitical shifts.
The global apparel manufacturing landscape is witnessing a significant institutional reset, spearheaded by the Hong Kong-based Epic Group. The sustainable garment giant is reportedly evaluating a minority or majority stake sale that could value the enterprise at upwards of $500 million. Partnering with Goldman Sachs and BDA Partners, the company is positioning itself to capitalize on a resurgent Asia-Pacific M&A market, which has seen heightened interest from private equity firms looking for stable, high-output manufacturing hubs that merge massive scale with sophisticated ESG standards.
Strategic expansion into the Indian market and Industry 4.0
The potential capital raise arrives as Epic Group executes an aggressive $100 million expansion into Odisha, India. This ‘Made in India’ project, supported by a recent $100 million debt financing package from the International Finance Corporation (IFC), includes a massive 1.3 million square foot facility in Bhubaneswar. The first phase, scheduled for full operation in late 2025 and early 2026, is projected to generate $200 million in annual revenue and create over 10,000 direct and indirect jobs. Beyond India, Epic is doubling down on ‘Factories of the Future’ in Jordan and Bangladesh, utilizing Industry 4.0 technology and RFID garment tracking to offer significant duty savings and speed-to-market advantages to its primary U.S. and Japanese client base- including Levi Strauss, Uniqlo, and Walmart.
Navigating decarbonization and vertical supply chain integration
The move toward a formal stake sale is heavily influenced by the firm's transition from a traditional trading house to a vertically integrated, tech-enabled powerhouse. Epic has committed to a 65 per cent reduction in greenhouse gas emissions per garment by 2030, a goal supported by the IFC’s sustainability-linked loan. By focusing on circularity and waterless dyeing technology, the group is insulating its margins from rising raw material costs and tightening environmental regulations in the European and US markets. This focus on ‘Better World’ manufacturing is proving to be a critical commercial differentiator, attracting investors who view decarbonization as a prerequisite for long-term profitability in the $1.7 trillion global fashion market.
Epic Group is a premier global apparel manufacturer founded in the 1980s. Headquartered in Hong Kong, it operates a network of world-class facilities across Bangladesh, Vietnam, Ethiopia, and Jordan, producing over 90 million garments annually. The group is currently scaling its presence in India with a $100 million flagship facility in Odisha. With a workforce of over 30,000 employees, Epic manages an estimated $2.2 billion in Gross Merchandise Value (GMV) and maintains a debt-efficient profile, recently securing its first green sustainability-linked loan from the IFC to fund net-zero initiatives.
The European Commission has finalized critical operational measures under the Ecodesign for Sustainable Products Regulation (ESPR), formally outlawing the destruction of unsold apparel and footwear. This legislative milestone targets the estimated 5.6 million tons of CO2 emissions generated annually by the disposal of unused textiles - a volume comparable to the total net emissions of Sweden. Large enterprises must comply with the ban by July 19, 2026, while medium-sized firms are granted a transition period until 2030.
Mandatory disclosure and standardized waste reporting
The newly adopted measures introduce a rigorous transparency framework requiring companies to publicly disclose the weight and quantity of unsold products they discard. According to Jessika Roswall, Commissioner, Environment and Circular Economy, these rules aim to eliminate the ‘take-make-waste’ model and establish a level playing field for sustainable brands. To facilitate this, a standardized reporting format will become mandatory in February 2027, forcing retailers to move beyond vague sustainability claims toward data-backed inventory governance.
Derogations and strategic shifts in inventory management
While the ban is broad, the Commission has outlined specific ‘derogations’ where destruction remains permissible, such as for products that pose health and safety risks or have suffered irreparable physical damage. However, the regulatory pressure is already driving significant commercial realignment. Retailers are increasingly investing in Digital Product Passports (DPP) and AI-driven demand forecasting to minimize overproduction. This shift is particularly critical as online return rates in Europe hover around 20 per cent, frequently resulting in ‘deadstock’ that was previously incinerated or landfilled.
The Ecodesign for Sustainable Products Regulation (ESPR) is the EU’s primary tool for making products more durable and recyclable. It targets high-impact sectors, specifically textiles and footwear, to reduce resource dependency.
The framework introduces Digital Product Passports to track material provenance. Non-compliance after the July 2026 deadline for large firms could result in significant fines and exclusion from public procurement contracts across the European Union.
Vishal Fabrics (VFL) has demonstrated consistent commercial momentum in Q3, FY26 reporting a total income of Rs 424.16 crore (approximately $46.66 million). This performance represents a 5 per cent Y-o-Y increase from Rs 404.15 crore in the corresponding period of the previous year. While the broader textile industry navigates fluctuating raw material costs, VFL’s ability to maintain a positive trajectory is attributed to a strategic emphasis on high-margin, value-added products and enhanced operational efficiency.
Strategic adaptation to evolving fashion demands
The denim manufacturer is increasingly aligning its production capabilities with global retail trends, specifically targeting the surge in demand for sustainable and performance-driven apparel. With the Indian denim market projected to reach $9.15 billion by late 2026, VFL is prioritizing ‘sustainability-ready’ fabrics that utilize water-efficient dyeing processes and recycled fibers. The company’s Q3 performance reflects a disciplined execution of their long-term growth priorities, states Dharmesh Dattani, Chief Financial Officer, Vishal Fabrics. The company is currently optimizing its existing capacity of over 100 million meters per annum to better serve both domestic fast-fashion retailers and international export markets.
Navigating market volatility and sectoral challenges
Despite the revenue growth, the enterprise faces the industry-wide challenge of margin compression due to a 4.9 per cent rise in total expenses, which reached Rs 413.38 crore this quarter. Increased finance costs and the volatility of domestic cotton prices - which saw significant import surges across the Indian textile value chain in late 2025 - remain primary headwinds. However, VFL’s integrated manufacturing model provides a competitive buffer, allowing for better cost control compared to non-integrated peers. Industry analysts suggest,
VFL’s focus on Tier II and Tier III market penetration will be a critical volume driver as rural purchasing power for branded denim continues to strengthen.
As a core constituent of the Chiripal Group, Vishal Fabrics is a leading Indian denim manufacturer specializing in dyeing, printing, and processing high-quality fabrics. The company operates state-of-the-art facilities in Ahmedabad, primarily serving the global apparel and retail sectors. VFL is currently executing a modernization-led expansion strategy, focusing on sustainable certifications and digital manufacturing workflows to enhance export competitiveness. Historically recognized for its processing expertise, the firm has successfully transitioned into a vertically integrated denim powerhouse with a robust financial outlook tied to India’s growing ‘fast-fashion’ consumption.
