Why the Textile Industry in India Is Fading: Causes, Facts, and Solutions

The word ‘textile’ still brings up a colorful swirl of saris, bustling mills, and stories of generations at handlooms. That’s why it feels like a gut punch to realize that India, a country practically woven from thread and fabric, is watching its textile industry unravel. Imagine this: India once ruled the global cotton scene. Now, headlines talk about shuttered factories and workers walking home. So what’s really going on behind the faded curtain? The answers bring up more than just business—they touch history, politics, livelihoods, and the beat of daily life.

India’s Textile Legacy: From Golden Thread to Strained Yarn

India’s roots in textiles go deep; archaeological digs at Mohenjo-daro turned up remnants of cotton fabric dated to 3000 BCE. For centuries, Indian fabrics like muslin from Bengal and calico from Calicut commanded premium prices from Rome to Central Asia. Think about the British Raj—they practically bankrolled their empire with India’s textile riches, only to flood the local market with their own factory-made cloth. Fast forward to the late 20th century: India’s textile sector was still a giant, keeping more than 45 million people employed and pumping out everything from sari silks to mass-market t-shirts.

Here are a few unforgettable numbers:

There’s something stark in those figures. The workforce peaked and is now dropping. Exports, once the bright spot, have shrunk. The share in national GDP? That’s also falling. Why does this matter? India’s economy has been counting on textiles for over a thousand years, not just for business but as a safety net for the rural poor, especially women.

Until a decade ago, you’d see long queues outside spinning mills in Tamil Nadu or the clack of handlooms in Varanasi. It’s different now. Shift changes happen in silence, and empty frames gather dust in what used to be the heartbeat of a town.

The Domino Effect: What’s Pulling the Threads Loose?

It’s tempting to point the finger at cheap imports or rising wages, but if you dig deeper, it’s more tangled. The minimum wage in Bangladesh, for example, is still less than half of India’s. That’s one huge reason Western clothing giants are placing orders right across the border. Still, that’s just one domino in the cascade.

Let’s walk through the main reasons:

• Rising Input Costs: Cotton, dyes, electricity—everything’s more expensive. India’s cotton prices shot up by 50% between 2022 and 2024 after erratic monsoons and farmer protests. Mills from Surat to Ludhiana felt the squeeze.
• Global Competition: Bangladesh, Vietnam, and China all have more business-friendly laws, government support, and, yes, lower labor costs. The numbers don’t lie—Bangladesh’s garment exports hit $47 billion in 2024, easily outpacing India.
• GST and Compliance Issues: The introduction of GST (Goods and Services Tax) in 2017 looked good on paper. But small textile players say they’re buried under paperwork and extra costs. Many closed up shop because they just couldn’t keep up.
• Tech Gap: While India’s top factories run modern machines, thousands of small units still use 1970s tech. Compared to the sleek, fully automated production lines in Vietnam, they just can’t deliver at the same speed, cost, or quality.
• Poor Infrastructure: Power outages, clogged roads, and unpredictable railways ramp up hidden costs. In big export states like Andhra Pradesh, an hour lost to blackout is an hour of foreign sales gone.
• Covid-19 and After Effects: In 2020-21, as many as 120,000 small manufacturers were forced to shutter, either temporarily or for good. The ripple effects still haven’t settled. Workers migrated back to villages, and many just never returned.
• Changing Consumer Tastes: Global buyers now want ‘fast fashion’—trendy clothes churned out fast, in smaller batches. India’s traditional bulk production model wasn’t designed for this shift.
• Environmental Pressures: The textile sector is a water and chemical guzzler. Fashion chains, pressured by eco-conscious shoppers, have started to avoid suppliers that don’t meet green standards. Indian mills often struggle to get certified—and lose business as a result.
• Fragmented Structure: India’s textile industry sprawls across a patchwork of tiny, informal units. That leaves them with less muscle to bargain for raw materials, negotiate shipping, or invest in upgrades.

The upshot? The traditional strengths—skilled labor, natural fibers, and heritage craft—aren’t enough to hold off the tidal wave of global change. I remember Elena’s grandmother talking about the pride she felt weaving for hours under her old fan in Kanchipuram. That story is fading, replaced with anxiety and closures.

Human Impact: Behind Every Stitch, a Personal Story

Policy makers get lost in spreadsheets, but the real story sits at kitchen tables across India. When a loom falls silent in a small town, it’s not just a job lost—it’s a legacy interrupted, a daughter pulled from school, or a sixty-year-old spinner forced to train as a day laborer. The social cost is invisible until you hear someone talk about skipping meals so their youngest can stay in college.

Look at the numbers. In 2024, the South Indian Textiles Association reported that over 1.7 million workers were laid off. Some towns in Andhra Pradesh saw unemployment double in just three years. It’s especially tough for women—textiles has provided one of the few stable income streams for rural women since the 1980s, and the drop is hitting hardest where money was already tight.

There’s also a rural-urban migration twist. As jobs dry up, folks leave for megacities like Mumbai or Delhi, chasing work that isn’t there. It’s no accident that informal settlements in these cities have ballooned in the past five years—people are threadbare but driven by hope.

And then there’s skill risk. India’s traditional textile skills are deep—think block printing, silk weaving, natural dyeing. But with demand down and young people leaving for other work, knowledge is at real risk of dying out. NGOs and some export firms are trying to preserve them, but with business slow, it’s hard to keep the next generation interested. My own cousins, who once apprenticed on looms, are now learning to code instead.

Tips for families affected? Strong community networks matter. Microfinance groups in Tamil Nadu are becoming a lifeline, pooling resources to launch small tailoring collectives or home-based businesses. Training programs run by NGOs—teaching design skills or helping with digital sales—are giving some a fighting chance. Connecting with buyers online (even on Instagram) lets artisans dodge the middleman and keep more money in their hands. There’s no magic fix, but every scrap of support counts.

Can India Stitch Together a Comeback?

Sounds gloomy, but the story isn’t finished. Experts are betting that if the right reforms come through, textiles could bounce back—or find new ground. India still has a massive domestic market, a history of adapting under pressure, and millions who need this industry to survive.

Here are a few possible ways forward:

• Push for Modernization: The government’s Production-Linked Incentive (PLI) Scheme, rolled out in 2021, offers payouts for upgrading tech, going green, and making high-value products. But real impact demands that smaller factories are included—not just the big names.
• Skill Upgrading: Partnerships between government, NGOs, and brands to upgrade worker skills for modern machinery, tech, and digital marketing are showing promise. If farmers could learn drip irrigation in a decade, mill workers can pivot too—with the right training.
• Eco-Friendly Certification: Helping clusters of small units group together to gain global sustainability certificates could unlock new export channels, especially for European markets. Getting proactive about chemical disposal and water conservation isn't just good PR—it's fast becoming the only way in.
• Streamlining GST: Simplifying the tax regime for small players would take a giant weight off their shoulders. Most want to play by the rules—they just can’t afford high-priced accountants or endless forms.
• Marketing Indian Heritage: Direct-to-consumer sales of handloom sarees, block prints, and sustainable fabrics can fetch premium prices abroad. Some brands are making it cool again to buy Indian, especially among diaspora customers in the US, UK, and Australia.
• Supply Chain Investment: Upgrading logistics—better roads, faster trains, reliable warehouses—would cut costs overnight. States like Gujarat are experimenting with ‘textile parks’ for shared infrastructure, and the early signs are hopeful.

Don’t count India out yet. There’s grit woven into this sector along with the thread. Stories from small towns—like an entire block banding together for a solar-generator loan, or designers who crowdsource the next big pattern—aren’t making headlines, but they’re the hints of a possible turnaround. Change won’t come from just government announcements or celebrity endorsements. It’ll come from the millions quietly determined to keep the looms humming.

The decline of the Indian textile industry feels personal when your own family has seen it up close, like Elena’s uncles closing the shop after fifty years. But if other countries can reimagine their industries, so can India—with a little help, a lot of hustle, and a belief that every old pattern can stitch together something new.