Mapping the Way Forward for 2026

India also has an opportunity to position itself as more than a production base. Offering flexibility, transparency, and problem-solving capability can help strengthen relationships with global buyers, says Suketu Shah

India’s textile industry enters 2026 with a renewed clarity of direction. After navigating years of global uncertainty, the sector has emerged more resilient, more organised, and better aligned with evolving market expectations. Capacity has held firm, exports have stabilised, and both policymakers and manufacturers are increasingly focused on strengthening the foundations needed for long-term competitiveness rather than short-term gains.

Textiles and apparel continue to play a central role in the economy, contributing close to 2 per cent of GDP and around 11 per cent of manufacturing GVA, while supporting employment for more than 45 million people. Yet the real change underway is qualitative. The industry is moving toward higher standards across manufacturing, sourcing, and delivery, reflecting a gradual shift in how India positions itself within global textile supply chains.

Shifts reshaping the market

Technology adoption is becoming a necessity rather than a choice. Automation is spreading across spinning, weaving, processing, and garmenting as manufacturers respond to labour constraints, tighter delivery timelines, and rising quality benchmarks. Digital tools for production planning, inventory management, and traceability are also being adopted more widely, particularly by export-oriented units that operate under strict buyer requirements.

Policy continues to influence how the industry evolves. GST rationalisation has improved cash-flow visibility, while Quality Control Orders are raising baseline standards across categories. Progress in trade negotiations with the UK and the EU has also shaped expectations around future market access. Together, these developments are encouraging companies to focus not just on capacity, but on readiness, whether in documentation, compliance, or process discipline.

Global demand patterns are shifting as well. Buyers are diversifying sourcing to reduce concentration risks, which has created opportunities for India. At the same time, order sizes are becoming smaller, product cycles shorter, and demand more fragmented. This requires manufacturers to balance efficiency with flexibility, something the industry is still adapting to.

High-value segments gaining ground

Growth over the next few years is expected to come increasingly from value-added segments. Technical textiles continue to expand, supported by applications in infrastructure, mobility, healthcare, and agriculture. Performance-oriented fabrics that offer comfort, durability, stretch, or climate suitability are also seeing higher demand, especially in apparel and lifestyle categories.

In woven and denim fabrics, differentiation is becoming more important. Wider-width fabrics, comfort-stretch constructions, and specialised finishes are allowing manufacturers to move beyond standard offerings. These products help brands refine their collections while enabling better price realisation for producers. Sustainability-linked fabrics are also becoming part of regular sourcing conversations, rather than limited to niche programs.

The domestic market is another important factor. Demand for better-quality apparel and home textiles is growing in Tier II and Tier III cities as incomes rise and consumer preferences evolve. For manufacturers, this creates an opportunity to build scale while maintaining responsiveness closer to home.

Challenges that need attention

Despite progress, several challenges remain. Investment in research and development is still uneven, particularly in areas such as fibre innovation, new material blends, and advanced finishing processes. Long-term competitiveness will depend on more structured collaboration between industry, research institutions, and technology providers.

Skill development is another concern. As manufacturing becomes more automated, the need for trained personnel in machine handling, maintenance, and quality control is increasing. Without focused skilling efforts, technology investments may not deliver their intended benefits.

Compliance requirements are also becoming more demanding. Buyers are placing greater emphasis on environmental standards, chemical management, emissions reporting, and worker welfare. While many manufacturers have taken steps forward, consistency across the value chain remains a challenge, particularly for smaller units.

Export competition continues to be intense, with countries such as Bangladesh, Vietnam, and Turkey maintaining advantages in specific segments. For India, improvements in productivity, logistics efficiency, and lead times will be critical to maintaining and growing its share.

Rethinking how growth is built

In response, many companies are revisiting how they operate. Vertical integration is gaining importance to improve control over quality, costs, and timelines. Integrated manufacturing setups also allow faster development of new products, which is increasingly important in a market that values quick turnaround.

Innovation is shifting toward process improvements. Investments in water recycling, cleaner dyeing, and renewable energy are helping reduce operating risks while meeting buyer expectations. Digital integration across design, production, and supply chains is also helping reduce waste and improve planning accuracy.

Collaboration is becoming more common, whether through partnerships with brands, technology providers, or logistics players. Such approaches can help spread risk and accelerate improvement in a sector where margins are often tight.

Priorities for the years ahead

As the industry looks toward 2026, a few priorities stand out. Scale must be matched with reliability, as buyers value consistency as much as cost. Sustainability needs to be treated as a long-term business decision, not just a compliance requirement. Ongoing investment in innovation, across materials, processes, and skills, will be necessary to remain relevant.

India also has an opportunity to position itself as more than a production base. Offering flexibility, transparency, and problem-solving capability can help strengthen relationships with global buyers.

The foundations for growth are in place. The next phase will depend on execution, how effectively the industry turns its scale and experience into lasting competitiveness in a changing global market.

About the author:

Suketu Shah has been appointed as the Chief Executive Officer (CEO) of Vishal Fabrics. Shah holds a Bachelor of Science (BSc) degree and a Diploma in Textile Chemistry (DTC) from M.S. University, Vadodara, where he was awarded the prestigious Gold Medal for academic excellence.With over 40 years of experience in the textile industry, Shah has been instrumental in driving growth and innovation across several leading companies. His extensive career includes leadership roles at LNJ Denim – RSWM Group, Mafatlal Industries, Aarvee Denims C Exports, APAC Inti Corpora Bawen (Indonesia), Raymond UCO Denim, Modern Denim, and Arvind.