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India Sourcing Is On the Rise, Is the Industry Prepared?
Kate Nishimura
6 min read
India’s sourcing star is on the rise, but industry discourse isn’t yet reflecting the magnitude of the country’s influence on the apparel sector.
Now the third most utilized clothing production base for U.S. companies, India’s unique capabilities and benefits shouldn’t be discounted, according to Dr. Sheng Lu, professor of fashion and apparel studies at the University of Delaware. The country is experiencing a “surge in popularity,” but it’s remained less visible than other leading Asian apparel suppliers like China, Vietnam and Bangladesh.
A new study from Lu and research assistant Gabriella Giolli looked to recent research to discover why that’s the case, especially when more than 60 percent of brands that took part in the U.S. Fashion Industry Association’s (USFIA) summer benchmarking study said they planned to expand apparel sourcing from India within the next two years. The Indian apparel sector saw a 9.6-percent jump in U.S. apparel buys between January and September alone.
The South Asian nation also surpassed Bangladesh as a destination for American brands for the first time in 2024, USFIA data showed. Textiles and apparel account for about 2.3 percent of the country’s GDP, and insights from the United Nations Industrial Development Organization (UNIDO) revealed that India manufactured about $76.5 billion in textiles and $26.64 billion in apparel in 2022.
For scale, that’s still less than China’s output—but it surpasses the production volume of most leading Asian apparel producers, including Vietnam.
While the proof is in the numbers, many sourcing execs remain murky about the country’s promise and potential. According to Lu, that may be because India currently only exports around half of the apparel it produces. “Even though it’s not the top-tier exporter so far, in terms of total production capacity, [India] should not be ignored,” he said.
The nation of 1.43 billion represents a “large domestic market” that buys up much of the apparel supply, but there’s plenty of “untapped export capacity for India,” he added. “That’s not the case for Bangladesh or Vietnam—they export most of their apparel production because domestic consumption is very limited.”
Boasting more than 4,000 gins, 3,500 textile mills and about 45 million workers across its supply chain, vertical integration is a unique value proposition for India. A recent U.S. International Trade Commission (USITC) study showed that over 90 percent of the textile raw materials needed to fuel Indian apparel production can be sourced domestically, from cotton and organic cotton to silk, polyester and viscose.
Lu pointed to other leading apparel-producing countries for contrast; World Trade Organization (WTO) global value chain analysis estimated that more than 64 percent of Vietnam’s apparel exports in 2022 contained foreign yarns and fabrics. The same was true for 57 percent of Cambodian apparel exports, 49 percent from Indonesia and 33 percent from Bangladesh.
“India is truly known for its vertical supply chain. The foreign-made yarn and fabric percentage is very low,” Lu echoed. “Vertical manufacturing capabilities can offer India a lot of advantages in terms of flexibility, agility, and the variety of products you can make.”
Despite this key advantage, India hasn’t been able to break into the ranks of China, Vietnam and Bangladesh as a top apparel exporter. The country exported about $15 billion-worth of apparel in 2023, and it ranked No. 6 in terms of export volume, accounting for just 2.8 percent of the global total, according to the WTO. During the same period, India represented 5.5 percent of total U.S. apparel imports—”a significant supplier but not among the largest.”
Lu posited that India’s apparel industry may still be finding its place in the sourcing mix.
“If you’re looking at product targeted to the mass market, we see items made in India are definitely much more expensive than those made in Bangladesh and Vietnam—very similar to those made in China,” he explained. “And for the premium market, still much higher than made in Bangladesh and Vietnam, but little bit lower than made in China.”
“This leaves us with an impression, because of their more advanced economic level and wage level, that it’s not necessarily a cheap sourcing destination for brands and retailers,” Lu added. “India can be an alternative to sourcing from China, but also it’s about the kind of products India can produce and offer to the market.”
Lu and Giolli analyzed clothing labeled “Made in India” sold at U.S. retail between January and October 2024, and they found that it was priced significantly higher than apparel made in Bangladesh and Vietnam, especially in the mass market segment. The researchers found, however, that premium apparel items like tops, dresses and bottoms that were made in India were generally priced lower than those manufactured in China.
According to Lu, the results suggest that India might not be brands’ preferred sourcing destination for price-sensitive items that they are currently sourcing from Bangladesh or Vietnam, for example. Instead, it might represent a cost-cutting alternative to China for high-quality garments.
What’s more, shipments from India have not been targeted by U.S. Customs and Border Protection (CBP) under the Uyghur Forced Labor Prevention Act (UFLPA), given that it has its own domestic cotton supply.
As is true for any global sourcing locale, India has both geopolitical benefits and handicaps, he added. The country’s government has generally enjoyed a positive relationship with Washington, although President-elect Donald Trump this week threatened to impose 100-percent tariffs on the BRICS alliance, a trade coalition of which India is a part.
“An aspect where I think India is still lagging behind China is its influence and integration with the Asia-based textile and apparel supply chain,” Lu added. While India is largely self-sufficient and its apparel industry free from dependence on the sourcing superpower, there are some drawbacks, he said. “It is more like an isolated supply chain, and its influence is much more limited than China.”
India withdrew from the Regional Comprehensive and Economic Partnership (RCEP), the largest regional trade agreement in the Asia region, in 2019, because of its concern about competition with China. With its liberal rules of origin, the trade agreement has allowed China to work closely with the RCEP’s 15 members “to build an even more integrated regional supply chain.”
This lone-wolf stance could end up hurting India’s apparel sector in the long-term, Lu said. As more Western brands seek to expand their sourcing portfolios, they’re increasingly looking to engage with vendors with the capacity to work across borders or manufacture in multiple countries.
The researchers also questioned “whether India is fully committed to expanding labor-intensive apparel production and exports, given the country’s economy is moving toward more capital and technology-intensive sectors.”
“India is definitely a well-known as a leader in the IT sector, but for textile and apparel, can they recruit additional government support and workers to support their apparel production and substantially expand their manufacturing capability?” Lu added.
“A question mark that remains in our minds is about India itself—how ambitious does it want to be to become a leading apparel exporter in the world?”
