The biggest shift in global apparel sourcing over the past 15 years has produced an uncomfortable paradox for India. China has surrendered a substantial portion of its dominance, but India has captured little of the business that moved into the global sourcing network. China's share of global garment exports fell from 36.9 per cent in 2010 to 27.3 per cent in 2025, a decline of 9.6 percentage points. PL Capital estimates that this decline potentially released $50 billion-$60 billion of floating orders into global procurement. India, however, saw its share slip from 3.2 per cent to 3 per cent over the same period.

The contrast is sharper when compared to Bangladesh and Vietnam. Their combined share rose from about 7 per cent in 2010 to over 13 per cent in 2025, effectively capturing a substantial part of the sourcing diversification that followed China's gradual withdrawal.

Table: India’s falling share in global apparel sourcing

Rivals captured the shift

The difference points to a problem rather than a temporary export cycle. Bangladesh built large, compliant factories capable of handling long production runs, while Vietnam developed deeper synthetic textile capabilities and benefited from its integration with East Asian manufacturing and chemical supply chains. Both were better aligned with two requirements of the post-China sourcing model: scale and speed.

India's manufacturing base remains more fragmented. Tirupur, Noida, Surat and Ludhiana have significant production capabilities, but much of this continues to be organised around cotton and smaller production units. That is at odds with global clothing demand. Sportswear, athleisure and performance categories have pushed up the use of man-made fibres (MMF), while international buyers are seeking suppliers capable of producing complex synthetic garments at scale.

India's approximately $37 billion textile and apparel exports in FY26 therefore mask a deeper composition problem. Ready-made garments accounted for about 44 per cent of exports, but the country's broader apparel opportunity remains constrained by its fibre mix and manufacturing architecture.

Scale has become a sourcing currency

The procurement model of global fashion companies is also changing. Brands are consolidating vendor lists and awarding larger volumes to suppliers that can showcase consistent quality, traceability, environmental and labour compliance and the ability to support large orders without excessive subcontracting. This plays directly into the hands of vertically integrated manufacturers.

A fragmented factory network can produce efficiently at the individual-unit level but becomes less competitive when a global brand wants one supplier to coordinate fabric, processing, cutting, stitching, washing, finishing and logistics. Subcontracting can bridge the capacity gap, but it can simultaneously complicate traceability and compliance, important considerations for Western buyers.

Lead times and financing costs add another layer of disadvantage. Smaller Indian units often face higher borrowing costs and less room for automation investment, while production spread across multiple locations increases logistics complexity.

Tariffs compound the problem

Cost competitiveness cannot be considered independently of market access. Indian exporters continue to face standard tariffs in important Western markets, while competitors such as Bangladesh and Vietnam benefit from preferential arrangements. The resulting duty differential can materially affect margins in an industry where purchasing decisions are highly price-sensitive.

This makes India's trade negotiations important for apparel rather than merely diplomatic. At the same time, the government is attempting to address the domestic supply-side constraints through the PLI scheme for MMF textiles and garments and seven proposed PM MITRA parks.

The intended model is significant: spinning, weaving, processing and garment manufacturing located within integrated industrial ecosystems. If implemented effectively, such clusters could reduce internal logistics, improve turnaround times and make larger-scale production commercially viable.

But infrastructure alone will not resolve the export gap. India also needs a much larger synthetic manufacturing sector and stronger connections between fibre producers, textile mills and garment exporters.

Gokaldas Exports showcases one possible response to India's constraints. The Bengaluru-based company has increased its manufacturing footprint into East Africa while upgrading domestic facilities. A multi-country production network allows it to align manufacturing locations with customer requirements and tariff structures while retaining capabilities in areas such as design, cutting and washing. Its approach reflects a broader shift in global sourcing: more and more exporters need to think beyond the economics of a single factory.

Automation, compliance systems and direct relationships with tier-one retailers can help larger manufacturers capture orders that smaller, fragmented suppliers cannot service independently. The implication is that India's next phase of apparel growth may be less about adding factories and more about building globally integrated manufacturing companies.

The 3% warning

The China Plus One opportunity is therefore not automatically an India opportunity. China's export share fell almost 10 percentage points between 2010 and 2025. India gained virtually none of that ground, while Bangladesh and Vietnam more than compensated for their earlier smaller positions.

The lesson is less about the size of India's textile industry than its ability to convert manufacturing capacity into globally competitive supply chains. India's ambition of reaching $40 billion in apparel exports by 2030 will depend on whether manufacturers can move towards MMF, larger integrated production platforms, shorter lead times and greater automation, while policymakers close the tariff gap through trade agreements.

As AEPC chairman Sudhir Sekhri puts it, global brands are consolidating sourcing with suppliers that can deliver integrated capacity, speed and certified sustainability. That is the dividing line in apparel exports. India's challenge is no longer simply to produce more. It is to become easier for global brands to buy from.