The Indian textile and apparel sector faced a severe contraction in March 2026, with cumulative exports declining by 14.02 per cent Y-o-Y to $2.91 billion. According to data rele1ased by the Ministry of Commerce and Industry, the decline was most acute in the ready-made garment (RMG) segment, which saw a sharp 18.99 per cent contraction. Industry analysts attribute this downturn to escalating geopolitical tensions in West Asia, which have severely disrupted key maritime routes. Exports to the Middle East alone fell by nearly 58 per cent, while shipments to the United States - traditionally India’s largest market - slipped by 20 per cent following the imposition of high reciprocal tariffs earlier in the fiscal year.
Rising input costs and margin rosion
Despite the export slump, domestic raw material dynamics have shifted significantly. For the full fiscal year, raw cotton imports increased by approximately 54.9 per cent to $1.88 billion, driven by temporary duty exemptions aimed at supporting downstream weavers. However, Ashwin Chandran, Chairman, Confederation of Indian Textile Industry (CITI), notes, while man-made fiber (MMF) trends remain stable, cotton textiles face immense stress from rising logistics costs and heightened insurance premia. The sector’s contribution to India’s total merchandise exports has subsequently eased to 8.10 per cent, down from 8.36 per cent in the previous year, reflecting a structural cooling of global demand for labor-intensive goods.
Logistical resilience and policy intervention
In response to the ‘triple squeeze’ of freight inflation, war-related risks, and stagnant private investment, the Government of India launched the RELIEF (Resilience & Logistics Intervention for Export Facilitation) scheme on March 19, 2026. This time-bound intervention, implemented via the ECGC, provides calibrated financial support and insurance facilitation specifically for MSME exporters navigating the volatile West Asia corridor. Furthermore, the Ministry of Textiles has unveiled the ‘Vishwa Sutra’ initiative to reposition Indian handlooms in global fashion hubs. By reimagining 30 traditional weaves for international markets, the government aims to recover lost ground and meet the ambitious Rs 1 lakh crore export target by 2030 despite the current macroeconomic headwinds.
India is the world’s sixth-largest exporter of textiles, specializing in cotton yarns, knitwear, and home textiles. The industry serves major retailers in the US and EU while pivoting toward MMF apparel and technical textiles for future growth. Following recent FTA negotiations with the European Union and Oman, the sector is targeting a diversified global footprint to offset regional geopolitical dependencies.
