NITI Aayog releases “Key Sectors to Position India as a Global Manufacturing Hub,” spotlighting Textile, Clothing and Footwear (TCF) among priority sectors for export growth and jobs
TCF POST Special Report
New Delhi, 13 August 2026 — NITI Aayog, the premier policy think tank of the Government of India, has released a landmark report, “Key Sectors to Position India as a Global Manufacturing Hub,” identifying priority sectors with strong potential for global competitiveness, value addition, employment generation and deeper integration into global value chains. The report lays out a strategic roadmap to strengthen India’s manufacturing ecosystem and advance the vision of a Viksit Bharat — a developed India.
Among the sectors profiled for their strategic alignment, market potential and readiness, the report gives extensive treatment to Textile and Clothing, both flagged as labour-intensive, employment-rich industries central to India’s manufacturing ambitions. The report notes these sectors, together with furniture, have historically been significant contributors to India’s export basket even as the country’s overall export mix remains skewed towards lower value-added products such as textiles and gems & jewellery.
A Pillar Industry Under Pressure to Transform
According to the report, India’s Textile, Clothing and Footwear (TCF) industry is one of the country’s most important manufacturing sectors — contributing close to 2% of national GDP, 11% of manufacturing gross value added, and 9% of merchandise exports. It is the second-largest employer in the country after agriculture, sustaining livelihoods for more than 45 million people, with nearly 80% of industry capacity concentrated in micro, small and medium enterprise (MSME) clusters across the country.
In fiscal 2025, India exported textile products worth $37.7 billion, giving it a 4.1% share of the global textile and clothing export market and making it the world’s sixth-largest textile exporter. On production, India remains among the largest cotton producers globally, accounting for roughly 22% of world cotton output in 2023/24, and continues to be the largest exporter of cotton yarn, with a 29% share of global cotton yarn exports in calendar 2023.
The global opportunity is sizeable: the worldwide TCF industry is projected to expand at a CAGR of 2.5–3.5% to reach approximately $1.8 trillion by 2027, driven by fast fashion, e-commerce expansion, urbanisation and rising disposable incomes. But the report cautions that global demand is tilting decisively toward man-made fibres (MMF), particularly polyester, even as India’s domestic industry remains heavily cotton-reliant — a structural mismatch the report identifies as one of the sector’s biggest constraints.
Key figures flagged in the report:
- Readymade garments/clothing (RMG) account for 50–60% of the domestic textile market and 42% of total textile exports.
- The domestic technical textiles market has grown at a 7% CAGR, rising to $26.8 billion in FY24 from $19 billion in FY19; technical textile exports rose from $1.99 billion (FY19) to $2.59 billion (FY24).
- The government aims to more than double the textile business to $350 billion by 2030, from the current $179 billion, and to nearly triple textile exports to $100 billion by fiscal 2030, up from $37.7 billion.
- The technical textiles segment alone is targeted to reach a $40 billion domestic market and $10 billion in exports by 2030.
- China remains the dominant global clothing exporter with roughly a 29% share, though this has eroded amid supply-chain de-risking and curbs linked to Xinjiang cotton — a shift the report frames as an opening for competitors like India, Bangladesh and Vietnam.
- The United States is India’s largest clothing export market, its share rising from 26% in 2018 to 33% in 2024.
Structural Challenges Flagged
The report identifies four core challenges limiting India’s global competitiveness in TCF:
- Heavy reliance on cotton even as global demand shifts toward MMF, compounded by limited domestic availability of key MMF feedstocks such as PTA and MEG.
- Fragmented manufacturing capacity in weaving and processing, dominated by MSMEs facing constraints in technology, scale and productivity.
- Market access disadvantages relative to Bangladesh and Vietnam, which enjoy wider preferential trade arrangements with major importing markets.
- Below-average labour productivity — the report’s data shows gross value added per worker in textiles at roughly half the overall industry average, alongside limited private R&D investment.
Policy Push: PLI, PM MITRA Parks and Beyond
The report credits several government interventions with strengthening the sector’s foundations:
- The PLI Scheme for Textiles has approved 96 applications with a proposed investment of ₹32,085 crore and projected turnover of ₹2,32,158 crore; as of July 2025, it had generated investments of ₹7,343 crore and exports of ₹538 crore.
- PM MITRA Parks — envisioned as integrated textile value-chain hubs of at least 1,000 acres each — saw their first functional unit inaugurated in Telangana in May 2026 (₹1,695 crore project cost), while the Madhya Pradesh park has allocated 1,294 acres to 91 companies, drawing investment commitments exceeding ₹20,000 crore and an expected 72,000 jobs.
- The Samarth skilling scheme had trained 4.57 lakh beneficiaries as of August 2025, with 78% securing placements.
- The newly announced Mission for Cotton Productivity and the National Technical Textiles Mission (₹1,480 crore outlay) round out the government’s push to lift raw-material quality and diversify the product mix.
The report recommends correcting the inverted GST duty structure between MMF feedstock (PTA and MEG, still taxed at 18%) and downstream products (taxed at 5%), easing customs duty on MEG imports (35% of which are currently imported), and deepening free-trade agreements to close the market-access gap with Bangladesh and Vietnam.
Drawing lessons from global leaders, the report notes that Bangladesh built its garment export dominance on competitive labour costs and preferential market access, Vietnam on trade integration and FDI-backed industrial parks, and China on long-term industrial planning and integrated MMF supply chains — a playbook it suggests India must adapt to hit its 2030 targets.
How India Stacks Up: Bangladesh
The report’s country-benchmarking section shows Bangladesh has steadily gained global RMG market share — from 3% in 2004 to 10% in 2024 — compared with India, which has stayed flat at around 3% over the same period (Table 12: Share of key exporting countries in the global RMG trade). Textiles account for more than 85% of Bangladesh’s total exports, and the report attributes this dominance to low labour costs, a large workforce and duty-free, quota-free access to the EU under the Generalised System of Preferences (GSP) and Everything But Arms (EBA) schemes — under which RMG makes up nearly 90% of the EU’s imports from Bangladesh. By contrast, the report’s duty-free access comparison (Table 15) shows India lacks equivalent preferential access to the EU and UK-EU-style markets that Bangladesh enjoys by virtue of its Least Developed Country (LDC) status — though this status, and the associated concessions, are being phased out as Bangladesh graduates from LDC status by 2026. The report also notes Bangladesh’s cash incentive structure (0.5–15% of export value, with a 4% base incentive for RMG), a revised corporate tax rate of 15% for listed textile firms (versus 27.5% for non-listed general companies), and infrastructure measures such as the BGMEA-developed “Garment Palli” integrated park and 90 green-certified garment factories — the highest number globally, per the report.
How India Stacks Up: Vietnam
Vietnam is highlighted in the report as the second-largest exporter of readymade garments globally, a position it took over from Bangladesh in 2020, with more than 6,000 textile and garment manufacturing companies and over 2.5 million workers as of June 2022. Its global RMG export share rose from 2% in 2004 to 7% in 2024 (Table 12), again outpacing India’s roughly static 3% share. The report attributes Vietnam’s rise to extensive free-trade integration — it has signed 18 FTAs, including the CPTPP, the EU-Vietnam Free Trade Agreement (EVFTA) and RCEP, which eliminate tariffs on garments and textiles — alongside a 20% corporate tax rate with additional incentives for new investment in sectors like garments and footwear, and heavy foreign direct investment: foreign-backed companies account for around 60% of Vietnam’s fabric and garment exports and roughly 70% of its yarn exports, led by Chinese, Singaporean, Japanese, South Korean and Taiwanese investors. On duty-free market access (Table 15), the report shows Vietnam enjoys preferential access in markets such as Canada and South Korea where India does not, reinforcing the report’s broader finding that India lags both Bangladesh and Vietnam on FTA-driven market access even as it holds an edge in raw-material (cotton) self-sufficiency.
How India Stacks Up: China
China’s edge, per the report, lies less in RMG labour-cost competitiveness — where its ~29% global export share has slipped from a 2015 peak of 37% amid supply-chain de-risking and Xinjiang cotton-related restrictions — and more in its dominance of the man-made fibre (MMF) value chain. Citing the International Cotton Advisory Committee (ICAC), the report notes China accounted for approximately 70% of the world’s total MMF production in 2023, with MMF exports (fibres, yarn, fabric and finished products) growing at a 6% CAGR between 2017 and 2023 (Figure 49). The report attributes this to sustained state planning through successive Five-Year Plans targeting technology breakthroughs and R&D intensity in the chemical fibre industry, alongside fiscal levers such as a 200% pre-tax super deduction on R&D expenses, a reduced 15% corporate income tax (versus the standard 25%) for fibre manufacturers investing in western regions like Xinjiang, and export tax rebates of 13–16% on textile products. Against this, the report frames India’s continued reliance on cotton and comparatively nascent MMF capacity as the central gap to close, positioning China’s integrated, policy-driven MMF ecosystem as the benchmark India must approach to meet its 2030 export ambitions.
Footwear: Named as Part of the TCF Priority Basket
The report’s overview explicitly lists Leather and Footwear — alongside Textiles, Chemicals, Food Processing and other sectors — among the priority industries examined for their strategic alignment with India’s manufacturing hub ambitions under the broader TCF umbrella, citing their labour-intensive, export-oriented and employment-generating character as key strengths for India’s competitiveness case.
The Bigger Picture
Taken together, the report positions Textile, Clothing and Footwear (TCF) as central to India’s ambition of becoming a global manufacturing powerhouse, citing its outsized role in jobs, exports and inclusive, MSME-led industrial growth. With the government targeting $100 billion in textile exports by fiscal 2030, the report’s message is clear: closing the gap with Bangladesh, Vietnam and China will require a decisive shift toward man-made fibres, deeper trade integration, sustained investment in scale and technology, and a renewed push on productivity and skilling across the TCF value chain.
About NITI Aayog (National Institution for Transforming India). This is the Indian government’s premier policy think tank, established in January 2015 to replace the Planning Commission, which had existed since 1950. Unlike the Planning Commission, which had power to allocate funds to states, NITI Aayog acts as an advisory/policy body without financial allocation powers. It’s meant to foster cooperative federalism by involving states more actively in national policy-making. Its chairperson is the Prime Minister of India, and the CEO is a senior civil servant, appointed for a fixed tenure. Its core functions include designing strategic and long-term policy frameworks, monitoring and evaluating implementation of government programs, and promoting knowledge, innovation, and entrepreneurship.