India is the seventh largest wool producer in the world. The industry can broadly be divided into 10 major product categories: worsted yarn, woolen yarn, wool tops, fabrics, shoddy yarn, shoddy fabrics, blankets, knitwear, handmade carpets and machine made carpets.

In the organised sector are composite mills, combing units, worsted and non-worsted spinning units, knitwear and woven garment units, machine-made carpet manufacturing units. In the decentralised sector are hosiery and knitting units, powerloom units and independent dyeing and process houses.

Woolen handmade carpets contribute more than 70 per cent to total wool exports. The wool industry is concentrated in Punjab, Haryana, Rajasthan, Uttar Pradesh, Maharashtra and Gujarat. Punjab accounts for about 35 per cent of wool production units, followed by Maharashtra and Rajasthan.

The US and the EU are key export destinations for Indian wool and wool-blended products. Indian exporters are however geographically diversifying their exports to other regions such as the Middle East, Latin America, south east Asia, and east Asia. Major buyers of Indian woolen yarn, fabrics and made ups are Italy, the UK, Japan, Korea, China and the US.

However, India has limited facilities to produce apparel grade wool, which makes it dependent on importing wool.