FW
Following high-level diplomatic engagements between Indian External Affairs Minister S. Jaishankar and Chinese Foreign Minister Wang Yi, a new chapter appears to be opening in the India-China trade relationship. While a basic summary of the meeting points to a renewed focus on dialogue to ease border tensions, the most concrete outcome on the trade front has been China's decision to lift export restrictions on key commodities, including rare earth magnets and fertilizers.
This strategic shift is being closely watched by India's textile and apparel sector, where analysis indicates that while there may be some benefits, the most likely outcome is a further increase in imports from China, particularly of raw materials and machinery.
The Economic Reality: Increased imports are likely
The fundamental reason for this lies in the sheer scale and efficiency of China's textile industry, which far surpasses India's. This dominance creates a trade dynamic where India relies heavily on China for crucial inputs, a reliance that is only set to deepen with the lifting of export curbs.
Key imports from China for Indian textiles
|
Category |
Old Scenario (Restrictions) |
New Scenario (Easing) |
Likely Impact on Imports |
|
Machinery Components |
Supply Chain Disruptions |
Smoother Access, Less Downtime |
Increased. Indian manufacturers will import more to upgrade technology and ensure production stability. |
|
DAP Fertilizers |
Price Volatility, Scarcity |
Improved Supply, Cost Stabilization |
Increased. Cheaper and more reliable access to fertilizers will boost cotton yields, but imports will likely rise to meet agricultural demand. |
|
Raw Materials (Yarn, Dyes) |
Volatile Supply, Higher Costs |
Potential for Stable Supply and Lower Costs |
Increased. Lower costs and stable supply will make Chinese inputs more attractive, further cementing reliance. |
|
Finished Goods |
Competition and Trade Barriers |
Potential for Eased Access, Cheaper Goods |
Increased. China's scale advantage means it can flood the Indian market with cheaper finished products. |
This dynamic is already reflected in the significant trade deficit that India maintains with China in the textile and apparel sector.
|
Category |
India Imports from China (USD Billion) |
India Exports to China (USD Billion) |
|
Textiles & Articles |
3.5 |
0.8 |
|
Raw Materials (Yarn) |
1.2 |
0.1 |
|
Garments & Accessories |
0.8 |
0.3 |
|
Total |
5.5 |
1.2 |
Source: Ministry of Commerce and Industry, Government of India (latest available data, FY 2022-23)
The bilateral trade reality and the case for caution
While the new developments could help Indian textile manufacturers become more price-competitive in the global market, particularly in Western countries that are seeking to diversify their supply chains, the direct bilateral trade with China remains a significant challenge. Analysts argue that with its colossal production capacity, China is in a prime position to increase its exports of cheaper finished goods to India. This could exacerbate the existing trade surplus and pose a direct threat to India's domestic manufacturing base.
Tirupur and Surat industries’ heavy import dependence on China
The knitwear cluster in Tirupur and the synthetic textile industry in Surat both rely heavily on raw material imports from China. The recent developments could indeed stabilize their supply chains for inputs like yarns and dyes. However, this same opening exposes them to fierce competition from cheaper Chinese finished goods. This underscores a crucial point: the lifting of restrictions benefits India's ability to produce competitively for global markets but does not inherently provide an advantage for exporting finished goods directly to the Chinese market. Instead, it makes the Indian market a more attractive destination for China's products.
Diplomatic thaw, a double-edged sword for India's textile sector
The recent diplomatic thaw and the lifting of China's export restrictions, while seemingly beneficial, are a double-edged sword for India's textile sector. The likely outcome is a deeper reliance on Chinese raw materials and machinery, leading to an increase in imports. This, coupled with China's superior scale, could allow it to further dominate the Indian market with cheaper finished goods. While the developments offer an opportunity for India to strengthen its domestic production for global export, the challenge of a significant trade imbalance with China remains a complex and critical issue that requires strategic long-term planning.
The addition of spandex yarn in the textile industry has changed the sector in many ways. While traditional metrics like yarn count (NE) and GSM (grams per square meter) have long dictated fabric quality and feel, the inclusion of spandex is adding a new layer of complexity, impacting not just a fabric's stretch but also its weight, cost, and design possibilities.
Understanding the yarn count and GSM
At its core, fabric quality is defined by two fundamental metrics:
Yarn Count (Ne): This number indicates the fineness of the yarn. A higher count (e.g., 60s, 80s) signifies a finer, more lightweight yarn, ideal for soft, breathable fabrics. Conversely, a lower count (e.g., 20s, 30s) indicates a coarser, heavier yarn used for more durable and structured materials.
Fabric GSM (grams per square meter): This metric measures the fabric's weight and density. It's a crucial indicator of a garment's intended use.
• Lightweight (100–150 GSM): Perfect for summer shirts, linings, and innerwear.
• Medium-weight (150–250 GSM): The standard for everyday T-shirts, dresses, and casual wear.
• Heavy-weight (250+ GSM): Reserved for durable items like hoodies, sweatshirts, and towels.
Adding weight and complexity
Spandex, also known as Lycra or elastane, is a synthetic fiber renowned for its exceptional elasticity. When blended with natural fibers like cotton, it provides stretch and recovery, making garments more comfortable and form-fitting. However, its impact extends beyond just elasticity; it directly influences a fabric's GSM and, consequently, its cost.
How spandex impacts GSM
Contrary to popular belief, adding spandex to a fabric blend, even in small percentages, typically increases the overall GSM. This is because spandex yarn, despite its fine appearance, is denser than most natural fibers like cotton or polyester. When a spandex filament is wrapped by or twisted with a cotton yarn, the combined yarn becomes slightly heavier. This results in a finished fabric that, for the same given yarn count, has a higher GSM than its 100 per cent cotton counterpart. For example, a 30s cotton single jersey might have a GSM of around 150-160, while a 30s cotton/5 per cent spandex blend could easily jump to 170-180 GSM.
The cost equation
The introduction of spandex also adds a layer of complexity to costing. While the primary cost is the spandex fiber itself, there are other factors at play. For example, raw material cost as spandex is a petroleum-based product and is significantly more expensive per kg than cotton or polyester. Even a small percentage can increase the raw material cost of the yarn. Moreover, special machinery and more delicate handling are often required during knitting and weaving to prevent the spandex from breaking or losing its elasticity. This can slow down production and increase operational costs.
Spandex also requires specific dyeing processes and chemical treatments to ensure the color consistency with the blended fibers. These specialized finishes can add to the overall cost. Fabrics with spandex are often marketed as "stretch" or "performance" fabrics, allowing brands to command a higher price point. This allows them to pass on the added costs to consumers who are willing to pay for the comfort and durability benefits.
GSM and cost comparison
The following hypothetical data table illustrates the impact of a simple 5 per cent spandex blend on a common single jersey fabric.
|
Fabric composition |
Yarn count (Ne) |
Typical GSM range |
Estimated cost per kg (raw fabric) |
|
100% Cotton |
30s |
150-160 |
$4.00 - $4.50 |
|
95% Cotton / 5% Spandex |
30s |
170-180 |
$5.50 - $6.00 |
|
100% Cotton |
40s |
120-130 |
$4.50 - $5.00 |
|
95% Cotton / 5% Spandex |
40s |
140-150 |
$6.00 - $6.50 |
|
Note: Costs are illustrative and subject to market fluctuations. |
As seen in the table, the 5 per cent spandex blend not only increases the fabric's GSM but also adds a substantial premium, making the fabric approximately 25-30 per cent more expensive at the raw material stage.
The bottom line for designers and consumers
The "spandex effect" is a critical consideration for designers and manufacturers. While it offers a pathway to creating more comfortable and functional apparel, it requires careful planning to balance the desired hand feel and performance with the increased weight and cost. For consumers, the price tag on a spandex-blended garment reflects not just the stretch but also the specialized processes and premium materials that went into its creation. The takeaway is clear: the modern textile landscape is no longer a simple calculation of yarn count and weight; it's an intricate dance of fibers, function, and finance, with spandex leading the way.
The ZDHC (Zero Discharge of Hazardous Chemicals) Foundation has launched a new online tool to help the textile, apparel, and footwear industries measure and manage their air emissions. Called the ZDHC Air Emissions Module, this tool is a part of the organization's broader ‘Roadmap to Zero’ program.
The tool has been designed to help companies track two main types of air pollutants: Volatile Organic Compounds (VOCs) and Greenhouse Gas (GHG) emissions (specifically Scope 1 and Scope 2)
ZDHC's philosophy is to work on ‘input chemistry’ to manage ‘output.’ The tool calculates potential VOC emissions based on the chemical inventory used in a facility's production processes. It requires suppliers to annually report their air emissions data. This helps facilities establish a baseline and track their progress toward meeting the ZDHC's Air Emissions Guidelines.
The tool aligns with the Science Based Targets Initiative (SBTi) to help companies set emission reduction goals in line with the Paris Agreement's 1.5°C pathway.
By providing a standardized way to track and report air emissions, the ZDHC aims to help the industry reduce its environmental impact and improve air quality in the communities where these facilities operate.
The ZDHC (Zero Discharge of Hazardous Chemicals) Foundation has launched a new online tool to help the textile, apparel, and footwear industries measure and manage their air emissions. Called the ZDHC Air Emissions Module, this tool is a part of the organization's broader ‘Roadmap to Zero’ program.
The tool has been designed to help companies track two main types of air pollutants: Volatile Organic Compounds (VOCs) and Greenhouse Gas (GHG) emissions (specifically Scope 1 and Scope 2)
ZDHC's philosophy is to work on ‘input chemistry’ to manage ‘output.’ The tool calculates potential VOC emissions based on the chemical inventory used in a facility's production processes. It requires suppliers to annually report their air emissions data. This helps facilities establish a baseline and track their progress toward meeting the ZDHC's Air Emissions Guidelines.
The tool aligns with the Science Based Targets Initiative (SBTi) to help companies set emission reduction goals in line with the Paris Agreement's 1.5°C pathway.
By providing a standardized way to track and report air emissions, the ZDHC aims to help the industry reduce its environmental impact and improve air quality in the communities where these facilities operate.
Welcoming the UK government's recent announcement of liberalized rules of origin under the Developing Countries Trading Scheme (DCTS), the Joint Apparel Association Forum (JAAF) hailed it as a major boost for Sri Lanka's apparel industry.
The new reforms will permit Sri Lankan manufacturers to source up to 100 per cent of their garment inputs from any country worldwide while still benefiting from duty-free access to the UK market, says Yohan Lawrence, Secretary General, JAAF, This change reduces processing restrictions and aligns Sri Lanka's apparel sector with the ‘Comprehensive Preferences’ enjoyed by other nations under the DCTS, he adds.
The UK is one of the most important export destinations for Sri Lankan apparel. Lawrence opines, the simplified rules will allow manufacturers to be more competitive globally, diversify their sourcing strategies, and maintain consistent access to UK buyers. The changes also reinforce Sri Lanka's reputation as a reliable, value-added supplier within global fashion supply chains.
By removing sourcing restrictions, the UK has leveled the playing field for Sri Lankan manufacturers, giving them the flexibility to provide greater value to both global brands and UK consumers, Lawrence notes. The reforms will lead to expanded trade, enhanced industry competitiveness, and the creation of more jobs within the sector, he anticipates.
The JAAF also acknowledged the collaborative efforts of the UK High Commission, the Department of Commerce, and the Sri Lankan apparel industry in advocating for this positive change. The new rules are expected to increase exports, improve efficiency, and strengthen the long-standing trade partnership between the two nations. As Sri Lanka's largest export earner, the apparel industry, which employs over 350,000 people directly and supports over a million livelihoods, relies on such liberalized trade agreements to drive the country's economic recovery and long-term growth.
Rahul Mehta, Chief Mentor, Clothing Manufacturers Association of India (CMAI), has hailed the government's objective to simplify the GST structure by reducing the number of tax slabs and to make essential consumer products, like clothing, more affordable. This goal aligns perfectly with the interests of the apparel industry, he notes.
However, currently, garments are taxed at 5 per cent for those priced up to Rs 1,000 and at 12 per cent for those above that threshold, Mehta points out. If the 12 per cent slab is eliminated, garments in that category might be pushed into a new, higher 18 per cent slab, which would be ‘disastrous,’ he warns.
To avoid this outcome and truly benefit the industry, Mehta advocates for a single, uniform 5 per cent GST rate across the entire textile value chain. He argues, this is a solution the apparel industry has been seeking since the GST's inception. A uniform rate would not only make clothing more affordable for consumers but also resolve the long-standing issue of the inverted duty structure.
Mehta further warns, increasing the Rs 1,000 price threshold pushes garments above the new limit into a much higher 18 per cent slab. The significant gap between a 5 per cent and 18 per cent rate would encourage manufacturers to compromise on product quality to fall into the lower tax bracket, he says. It could also lead to unethical practices like under-invoicing and the growth of an unregulated ‘grey market,’ as businesses may seek to avoid the high tax rate, he adds.
In conclusion, while the intentions behind the GST reforms are ‘commendable’ and ‘long overdue,’ Mehta emphasizes, the government must be meticulous in its implementation to avoid unintended, harmful consequences for the apparel industry.
According to a report by marketsandmarkets.com, ‘Textile Recycling Market – Global Forecast to 2030,’ the global textile recycling market is projected to grow at a CAGR of 7.2 per cent from $8.41 billion in 2025 to $11.88 billion by 2030.
This rapid growth is driven by a combination of environmental, economic, and regulatory factors. As the global textile industry expands, particularly with the rise of fast fashion, a massive amount of waste is being generated. This has led to growing concerns about pollution, resource depletion, and climate change, prompting consumers and brands to embrace circular business models. Additionally, governments worldwide are implementing stricter policies, such as Extended Producer Responsibility (EPR) and landfill bans, which are pushing manufacturers to manage their waste more responsibly. Advances in mechanical and chemical recycling are also making it more feasible to process complex fiber blends.
The polyester and polyester fibers segment is the fastest-growing material in the market due to its widespread use in fast fashion and activewear. Advancements in chemical recycling now allow for the creation of high-quality, recycled polyester (rPET), which is increasingly being adopted by brands to meet their sustainability goals.
The pre-consumer textile waste category is projected to grow fastest because it is easier to recycle. Pre-consumer waste, such as cutting scraps and production overruns, is cleaner and more uniform than post-consumer waste. Brands are creating closed-loop systems to recycle this waste internally and align with zero-waste goals.
The online channel is growing rapidly due to its convenience and scalability. Digital platforms simplify textile collection, resale, and donation, while e-commerce sites boost sales of recycled products with features like digital labels and sustainability credentials.
The Asia Pacific region is expected to have the highest CAGR. As the world’s dominant textile manufacturing hub, countries like China, India, and Bangladesh generate a massive supply of waste. Governments in the region are increasingly focusing on sustainable waste management, and international brands are investing in local recycling infrastructure to meet global targets. This combination of supply, policy support, and growing awareness is positioning Asia Pacific as a leader in textile recycling.
In a major strategic move to boost its clothing business and compete with rivals like Next and M&S, John Lewis is launching 100 new menswear and womenswear brands in its stores.
This expansion includes high-end labels such as Mulberry, which will feature an exclusive collection of bags and accessories. Other new additions include brands like Akyn, By Malene Birger, and Iro. The retailer is also diversifying its offerings with specialized labels, such as Japanese camping wear brand Snowpeak and parkas from British designer Nigel Cabourn. This latest initiative builds on a previous expansion earlier this year, which saw 49 new fashion brands added for the spring/summer season. John Lewis currently stocks 650 clothing brands.
This fashion initiative is a key part of the company's wider $800 million turnaround program, which also involves store renovations and hiring more staff. The overhaul is being led by Peter Ruis, who joined the company last year with over 30 years of fashion experience. Ruis's goal is to give customers even more reasons to shop in our brilliant stores and to more than double the retailer's clothing revenue from $1.2 billion to $2.5 billion.
While Next and M&S have grown their share of the clothing and footwear market over the past five years, John Lewis's market share has remained flat at 1.5 per cent. However, this new push comes at a opportune time, as M&S has recently been hit by a cyber attack that disrupted its online and click-and-collect services for weeks. According to Louise Deglise-Favre, Analyst, Global Data, this situation creates a clear opportunity for John Lewis to capture some of this lost spending.
In addition to the new brands, John Lewis is expanding its own-label lines, including its largest-ever cashmere collection this autumn, which is expected to boost cashmere sales by at least 20 per cent. According to Rachel Morgans, Fashion Director, John Lewis, the retailer is carefully curating a premium quality range and is focused on adding brands that appeal to their customers rather than simply ‘chasing numbers.’
Global apparel retailer Uniqlo has launched its new Uniqlo and Comptoir Des Cotonniers 2025 Fall/Winter Collection. Combining French chic with Uniqlo’s ‘LifeWear’ philosophy, this capsule collection features seven items with a focus on high-quality materials, carefully selected colors, and modern design details.
The new collection highlights boxy cuts and matching sets. A key feature is the thick corduroy series, which includes curved pants, jackets, and miniskirts that can be worn as standalone pieces or as coordinating sets. Knits in the collection are designed to be simple yet sophisticated, with a focus on fabric and silhouette. The color palette for the collection includes navy, off-white, red, forest green, and chocolate brown, chosen to complement fall and winter styles.
Uniqlo’s ‘LifeWear’ concept is based on Japanese values of simplicity, quality, and longevity. The brand aims to create clothing that is constantly innovated to be warmer, lighter, and more comfortable.
Uniqlo is the largest of eight brands under Fast Retailing Co, a major Japanese retail holding company. With global sales of approximately 3.1 trillion yen in FY24, Fast Retailing is one of the world's largest apparel retailers. Uniqlo has over 2,500 stores worldwide, as part of the total of nearly 3,600 stores across the Fast Retailing Group's brands.
In a move that has sent a wave of optimism through its embattled textile sector, the Indian government has temporarily suspended the 11% import duty on cotton, effective from August 19 to September 30, 2025. This decision, a direct response to a long-standing demand from industry bodies, is seen as a strategic maneuver to stabilize the domestic market, bolster competitiveness, and even thaw strained diplomatic relations with the United States.
The temporary waiver, announced by the Central Board of Indirect Taxes and Customs (CBIC), is a crucial relief for an industry that has been struggling with high raw material costs and a challenging global trade environment. For India's textile and garment sector, which provides direct employment to an estimated 35 million people and contributes nearly 80% of the country’s total textile exports, the 11% import duty has been a significant drag on margins and a major hurdle to competing with rivals like Bangladesh and Vietnam.
The US Factor: A diplomatic overture to mitigate tariff shock
The timing of this cotton duty suspension is no coincidence. It is a calculated move by New Delhi to address escalating trade tensions with Washington. The United States has recently imposed steep tariffs on a wide range of Indian goods, including textiles, in response to India's continued purchases of Russian oil. The initial 25% "reciprocal" tariff was followed by an additional 25% levy, set to take effect on August 27, bringing the total tariff on many Indian exports to a staggering 50%.
This punitive tariff regime has put Indian exporters, especially those in the labor-intensive textile sector, at a severe disadvantage. Compared to competitors like Bangladesh and Vietnam, which face U.S. tariffs of around 20%, India's exports are now among the most expensive. This has led to a sharp decline in new orders, as American buyers are either halting shipments or seeking alternative suppliers to avoid the prohibitive costs. A study from the Indian Council for Research on International Economic Relations (ICRIER) notes that the tariffs are concentrated in sectors like textiles and apparel, which are critical for employment and livelihoods.
By suspending the cotton import duty, India is not only providing a cost-cutting tool for its domestic industry but also sending a powerful signal to the U.S. The move directly benefits U.S. cotton growers, who are India's second-largest supplier. It demonstrates a willingness to address a key U.S. agricultural trade concern, potentially paving the way for a de-escalation of the tariff standoff and reviving stalled bilateral trade agreement talks. The cancellation of a scheduled visit by U.S. trade negotiators had put a question mark on the future of these discussions, making a proactive gesture from India all the more important.
Rakesh Mehra, Chairman of the Confederation of Indian Textile Industry (CITI), praised the government's move as "a right step in the right direction." He acknowledged the delicate balance the government has to strike between protecting farmers' interests and ensuring the competitiveness of the textile industry. Mehra also noted the importance of this action in the context of global events, including the unpredictability from tariffs and ongoing geopolitical negotiations.
Industry leaders, including Dr. S.K. Sundararaman, Chairman of the South India Mills Association (SIMA), have repeatedly highlighted this disparity. He appreciated the move saying that it will "create a win-win strategy both for the cotton farmers and the industry to have a level playing field and gain global competitiveness." While the duty waiver provides a much-needed cost-cutting tool for mills, some farm groups and traders are wary, fearing that a surge in cheap imports could depress domestic cotton prices just as the new harvest season begins.
Price Parity: The crucial factor
The 11% import duty on cotton had created a significant price gap between domestic and international varieties. With the duty in place, the landed price of imported cotton often became uncompetitive, forcing Indian mills to rely on domestic supplies even when they were of a lower quality or insufficient quantity. The removal of this duty now allows for a crucial price correction.
For context, as of early August 2025, the average price of Shankar-6, a key Indian cotton variety, was approximately Rs 56,000 per candy (356 kg). With the 11% duty, the landed price of comparable imported cotton from the U.S. and Brazil was often higher. With the duty suspended, the landed price of high-quality imported cotton from the U.S., Brazil, or Australia will become more aligned with or even lower than domestic prices, offering mills a much-needed alternative. This is especially true for ELS cotton, which India has a domestic shortage of.
Table 1: Comparative cotton prices (August 2025, approximate)
|
Cotton Type |
Country of Origin |
Price (per candy, 356 kg) |
|
Indian Cotton (Shankar-6) |
India |
₹56,000 |
|
Imported Cotton (with 11% duty) |
U.S.A. / Brazil |
> ₹56,000 |
|
Imported Cotton (duty-free) |
U.S.A. / Brazil |
~₹50,000 - ₹55,000 |
Note: Prices are approximate and subject to market fluctuations.
The road ahead
While the duty suspension is a welcome relief, it is a short-term fix to a long-term problem. For the textile industry to achieve the government's ambitious target of $100 billion in exports by 2030, a more permanent solution is required. This includes addressing structural issues like domestic cotton productivity, which is currently at a 15-year low, and securing a long-term, duty-free cotton import policy, especially during the off-season.
The government's "Cotton Mission," with a budget of Rs 5,900 crore, is a step in the right direction, but its full impact will take years to materialize. Until then, the industry will continue to rely on a mix of domestic and imported cotton to meet its needs. The current duty suspension, while temporary, could be the catalyst that helps the Indian textile industry regain its footing and weave its way back to global leadership.
