India’s textile and apparel export performance in the first nine months of FY26 tells a story of quiet tension rather than collapse or boom. According to the Ministry of Commerce & Industry’s latest quick estimates, exports from the sector stood at $26.53 billion between April and December 2025, marking a marginal year-on-year decline of 0.26 per cent. At first glance, the numbers suggest stagnation. But beneath this flat headline lies a sharply divided industry, one half weighed down by raw material stress and fragile overseas demand, the other showing remarkable resilience amid global uncertainty.

What emerges is a tale of two supply chains: textiles grappling with headwinds, and apparel adapting rapidly to geopolitical shocks, tariff changes, and shifting buyer behaviour.

Apparel holds the line

If the textile and apparel ecosystem has an engine still firing, it is clearly ready-made garments (RMG). During April-December 2025, apparel exports grew 2.36 per cent to $11.58 billion, bucking the broader slowdown. December alone saw shipments rise 2.89 per cent year-on-year to $1.5 billion, underscoring the segment’s ability to stabilise after months of volatility.

Industry leaders attribute this resilience to strategic recalibration rather than demand-led exuberance. A Sakthivel, Chairman of the Apparel Export Promotion Council (AEPC), has pointed out that inflationary pressures in the US and Europe, coupled with geopolitical disruptions, have kept buyer sentiment uneven. Yet Indian exporters have managed to defend volumes by pivoting toward value-added products, improving compliance standards, and offering greater design flexibility.

Unlike previous cycles that relied heavily on scale and price competitiveness, FY26 has increasingly rewarded speed, reliability, and smaller batch responsiveness areas where Indian apparel manufacturers have invested steadily over the past three years.

When tariffs hit

The calm narrative around apparel growth hides a sharp mid-year disruption. September 2025 became a critical inflection point after the US imposed higher tariffs in late August. The immediate impact was severe: RMG exports fell 10.45 per cent year-on-year in September, dropping below the psychologically important $1 billion mark.

What followed, however, was a rapid industry response rather than prolonged damage. Exporters absorbed part of the tariff burden, renegotiated pricing with long-term buyers, and accelerated diversification into non-traditional markets. By October, the decline had narrowed dramatically, and by November, exports rebounded sharply on festive-season front-loading and broader market outreach.

Table: Monthly apparel volatility in FY26

This table illustrates how September’s tariff shock did not evolve into a prolonged downturn. Instead, it exposed the sector’s growing ability to respond tactically to trade disruptions, a capability that was largely absent during earlier global shocks.

Textiles lose momentum

While apparel adapted, the core textile segment struggled to regain footing. Exports of yarn, fabrics, and made-ups declined 2.19 per cent during April-December, settling at $14.95 billion. The pain was most visible in cotton-based categories, long considered the backbone of India’s textile exports.

Cotton yarn, fabrics, and made-ups fell 3.35 per cent over the nine-month period, with December alone recording a deeper 3.96 per cent contraction. These declines reflect not just weak demand, but also structural exposure to a narrow set of markets. As Chandrima Chatterjee, Executive Director, Confederation of Indian Textile Industry (CITI) says, India’s cotton textile exports remain heavily dependent on Bangladesh and the US. Cotton yarn and fabric shipments to Bangladesh slowed amid its macroeconomic instability, while US demand for home textiles such as towels and curtains softened under inflationary pressure.

Import pressure signals stress

One of the most telling indicators of stress within the textile value chain is the surge in raw cotton imports. During April-December 2025, imports of raw cotton and cotton waste jumped 80.31 per cent to $1.66 billion. This spike reflects domestic supply mismatches, quality differentials, and price volatility forcing mills to turn outward even as export realisations weaken. Rather than signalling expansion, this import surge highlights a cost squeeze, especially for spinning and weaving units operating on thin margins.

Diverging December signals

A closer look at December data compared with the nine-month average further highlights the sector’s uneven performance.

Table: December vs. FY26-to-date performance

The data underscores a structural shift underway. Man-made fibre (MMF) segments and handicrafts are beginning to regain traction, while cotton-heavy categories continue to underperform. This divergence aligns with global fashion trends favouring synthetics, blends, and functional fabrics, areas where India is still scaling capacity.

Trade deals as lifelines

Looking ahead, the sector’s recovery strategy is increasingly anchored in trade diplomacy rather than demand revival alone. Sakthivel emphasises the imminent conclusion of the India–EU Free Trade Agreement and the near rollout of the India-UK FTA could materially improve India’s competitiveness in developed markets.

Duty-free or preferential access could help neutralise tariff disadvantages against rivals such as Bangladesh and Vietnam, particularly in apparel. For an industry grappling with a cumulative decline of just 0.26 per cent, these agreements could prove decisive in pushing FY26 exports back into positive territory.

A sector in transition

India’s textile and apparel exports are no longer moving in tandem. Apparel has evolved into a more agile, design-led, and market-diversified engine, while textiles remain constrained by legacy dependencies, raw material volatility, and slower demand recovery. The FY26 data does not point to crisis but it does mark a transition phase. Those segments aligned with speed, compliance, and diversification are holding ground. Those tethered to commodity cycles and narrow markets are falling behind.

As global demand gradually stabilises and new trade corridors open, the industry’s challenge will be to ensure that the textile base catches up with the adaptability already visible in apparel so that future growth rests on a broader, more balanced foundation.