A new study by Prof Sheng Lu and research assistant Gabriella Giolli of the University of Delaware has shed light on India's growing potential as a key apparel sourcing destination for US fashion companies. The study, which examined recent research and industry trends, found that India is well-positioned to capitalize on several factors, including its large and skilled workforce, vertically integrated textile industry, and government support for the sector.
Reasons for India's growth prospects
As per United Nations Industrial Development Organization (UNIDO), India's textile and apparel industry produced approximately $76.5 billion in textiles and $26.64 billion of apparels in 2022, surpassing most other Asian countries. India is also one of the world's largest textile fiber producers, including cotton, silk, polyester, and viscose. Over 90 per cent of India's textile raw materials can be sourced domestically, ensuring a stable and reliable supply chain. India exported about $15 billion in apparel in 2023, making it the world's sixth-largest apparel exporter.
India’s biggest positive is its large and skilled workforce. It has a vast and skilled workforce, with over 45 million workers directly employed in the textile and apparel sector. This provides a significant advantage in terms of labor costs and scalability. Moreover India has a well-developed and vertically integrated textile industry, capable of producing a wide range of fabrics and garments. This reduces reliance on imported materials and streamlines the supply chain. The government has been actively promoting the textile and apparel industry through various initiatives, such as the Production Linked Incentive (PLI) scheme. This provides financial incentives and support to manufacturers, further enhancing India's attractiveness as a sourcing destination. Also, US fashion companies are increasingly diversifying their sourcing strategies to reduce reliance on China. India, with its favorable conditions and growing capabilities, is emerging as a strong alternative. In fact, several major US fashion brands have already started sourcing from India, including Gap Inc., Target, and Walmart. These companies have reported positive experiences with Indian suppliers, citing their quality, reliability, and competitive pricing.
"India has the potential to become a major apparel sourcing hub for US fashion companies," says Sheng Lu, Associate Professor at the University of Delaware. "The country's strengths in terms of labor costs, vertical integration, and government support make it an attractive alternative to China."
However, while India offers many advantages, there are also some challenges that US companies need to be aware of. For example they need to know India's infrastructure is still developing, and transportation and logistics can be challenging. Bureaucracy also can be complex and time-consuming to navigate. Lead times for production in India can be longer than in China.
India's textile and apparel industry is going through major changes with government support, industry initiatives, and a growing demand for ethically sourced and sustainable products. As US fashion companies continue to diversify their sourcing strategies, India is well-positioned to capture a larger share of the market. The country's strengths in terms of labor costs, vertical integration, and government support make it an attractive alternative to China and other sourcing destinations. With continued investment and development, India is expected to become a leading player in the global apparel industry.
