NEW DELHI: India’s textile industry, which employs the second largest number of people after agriculture, is facing significant challenges in sustaining itself amid a growing number of trade agreements and rising labour costs, coupled with decreasing factory efficiency.
Despite being the top producer of cotton and the second largest producer of textiles and garments globally, India accounts for only 4% of the world’s textile market. A recent report, titled The Missing Stitch: India's Unfinished Garment Export Story, presented at Bharat Tex 2026, highlighted the industry's tendency to export a substantial amount of fabric without adding value to it.
The report emphasized the industry's weak financial returns stemming from higher labor costs, complexities related to trade agreements and duty structures, and the fragmented operations of fabric manufacturers and garment makers. It further pointed out that disconnected information flows and misaligned quality processes create value leakage across the supply chain, resulting in increased costs and limited sales.
One striking example raised in the report questions the poor factory efficiency that has led to mismanagement in the textile industry's productivity. It indicated that Indian factories typically achieve only 58% to 70% of their target sewing output and deliver only 60% to 80% of orders on time and in the correct quantity (OTIF). This performance falls significantly short of the over 90% reliability expected by large international clothing retailers.
To meet delivery deadlines, factories often resort to shipping up to 20% of their orders by air instead of by sea, which is much more expensive, leading to increased costs and reduced profits.
The study, conducted by Vector Consulting Group, estimates that 35% to 45% of the fabric produced by Indian mills is exported without further value addition, representing a considerable missed opportunity for downstream value enhancement.
To address these challenges, the white paper proposes a production ecosystem model in which fabric manufacturers orchestrate planning, information, quality, inventory, and commercial decisions in collaboration with partner garment manufacturers.
By enabling independent firms to function as a coordinated production ecosystem, it is projected that sewing efficiency could improve to 80% to 85%, potentially increasing factory operating profits by 80% to 200%. The report estimates that these productivity gains could raise India's garment exports from $16 billion to between $19 billion and $23 billion, unlocking an additional $3 billion to $7 billion in exports from existing capacity.