India Textile Industry 2024 Outlook: Growth Drivers, Challenges, and Opportunities

India's textile industry is a large, labor‑intensive sector that produces fibers, yarns, fabrics and garments for both domestic use and export. It accounts for about 4% of the country’s GDP and employs over 45million people. As the market heads into 2024, the India textile industry 2024 outlook looks shaped by raw‑material trends, policy shifts, and rising demand for sustainable products.

Key Takeaways

• Overall sector revenue is projected to reach₹20trillion in FY2024‑25, driven by strong domestic consumption and export recovery.
• Cotton output is expected to grow 6% YoY, while synthetic fiber capacity expands by 4% thanks to new polyester plants.
• Government schemes such as the Export Promotion Capital Goods (EPCG) scheme and increased subsidies for handloom sector will boost competitiveness.
• Sustainability becomes a core driver - organic cotton share could cross 3% of total cotton use.
• Key risks include energy price volatility, global trade protectionism, and shortage of skilled workers for advanced automation.

Market Size and Growth Drivers

In FY2023‑24 the industry posted a turnover of roughly₹18.5trillion, a 9% rise from the previous year. The growth came from three pillars:

1. Domestic demand: Rising disposable income in Tier‑2 and Tier‑3 cities fuels demand for fashionable yet affordable apparel.
2. Export recovery: After a dip in 2022, garment exports rebounded, reaching$34billion in 2023, driven by the U.S., EU and Middle‑East markets.
3. Policy support: Initiatives like the Textile Parks programme provide integrated infrastructure that lowers logistics costs.

Analysts from the Confederation of Indian Industry (CII) forecast a compound annual growth rate (CAGR) of 7.5% for the next five years, positioning the sector as one of the fastest‑growing manufacturing verticals.

Raw‑Material Outlook: Cotton and Synthetic Fibers

Cotton production remains the backbone of the industry. The 2023 crop yielded about35million metric tonnes, 5% above the five‑year average. Better monsoon patterns and the adoption of Bt cotton varieties are set to push output to ~37million tonnes in 2024, translating into a 6% YoY increase in yarn availability.

On the synthetic side, synthetic fibers such as polyester and viscose are gaining ground. New polymer plants announced in Gujarat and TamilNadu add a combined capacity of 5.5million metric tonnes, enough to meet rising demand from activewear and home‑textile segments. Because synthetic fibers rely on petroleum, price swings in crude oil can affect margins, making the sector watch energy markets closely.

Policy Landscape and Government Schemes

The Indian government has rolled out several measures aimed at modernising the textile value chain. The most impactful are:

• Export Promotion Capital Goods (EPCG) scheme: Offers duty‑free import of capital equipment for exporters, with a 2024 credit limit of$2billion, encouraging upgrades to high‑speed looms.
• Amendment to the Textile Policy 2023: Introduces a 25% rebate on GST for units investing in water‑reuse technology.
• Make in India push for textile manufacturing clusters, backed by 25 operational Textile Parks across six states.
• Handloom sector subsidies: Direct cash transfers of up to₹40,000 per weaver, aimed at preserving traditional crafts and linking them to modern design houses.

These schemes collectively lower capital costs by an estimated 12% and improve the sector’s export readiness.

Export Outlook and Key Markets

Export data from the Ministry of Commerce shows that the United States, United Arab Emirates, and the United Kingdom remain the top destinations. In 2023, the United States accounted for 28% of total apparel exports, followed by the EU (22%) and the Middle East (15%).

The modest shift toward the United States reflects renewed demand for casual and work‑from‑home wear. Meanwhile, the EU market is tightening its sustainability standards, pushing Indian exporters to adopt eco‑friendly certifications.

Technology Adoption and Sustainability Trends

Automation is moving from manual to digital. Automation technology such as AI‑driven loom control and robotics for material handling is being piloted in 12 large mills. Early adopters report a 15% boost in productivity and a 10% cut in waste.

On the sustainability front, buyers in Europe and North America are asking for sustainable fabrics like organic cotton, Tencel, and recycled polyester. According to the Sustainable Apparel Coalition, India’s organic cotton acreage could rise from 150,000 hectares in 2022 to over 250,000 hectares by 2025, a 3% share of total cotton cultivated.

Water‑reduction initiatives, supported by the 2023 policy amendment, are encouraging zero‑liquid discharge (ZLD) plants. As of March2024, 18 mills have achieved ZLD status, saving an estimated 2.5billion litres of water annually.

Challenges and Risk Factors

Despite the upbeat numbers, the sector faces notable headwinds:

• Energy costs: Diesel and electricity prices have risen 12% year‑on‑year, squeezing margins for energy‑intensive spinning units.
• Skilled labour shortage: While the industry employs millions, there is a gap in workers trained to operate advanced machinery. Apprenticeship programmes are still low, with only 4% of units offering formal training.
• Global trade protectionism: Recent tariffs on apparel from India by the U.S. and the EU could erode price competitiveness if not addressed through value‑addition.
• Raw‑material price volatility: Cotton prices swing with monsoon variability, while polyester costs follow oil market fluctuations.

Companies that ignore these risks risk margin compression and loss of market share.

Strategic Checklist for Textile Players in 2024

1. Audit current energy consumption and explore solar or captive power options.
2. Leverage the EPCG scheme to upgrade to high‑speed, low‑energy looms.
3. Expand product lines to include sustainable fabrics - start with a pilot organic‑cotton collection.
4. Strengthen export compliance: obtain certifications like GOTS, OEKO‑Tex, and comply with EU’s REACH regulations.
5. Partner with local technical institutes to create a pipeline of skilled operators for automation tools.
6. Monitor global trade policy updates and diversify export destinations beyond traditional markets.

Following these steps can help firms capture growth while buffering against downside shocks.