Textile firms raise investment bets, but export ambition faces a reality check: Wazir Advisors

India’s textile and apparel industry is entering a period of confidence even as the arithmetic behind its most ambitious export target becomes more demanding. The latest Indian Textile & Apparel Industry Sentiment Barometer by Wazir Advisors shows that industry sentiment remains positive over the medium term, with companies positioning themselves for changes in global sourcing rather than merely waiting for a cyclical recovery in demand.

As per the survey 92 per cent are optimistic about the sector’s three-to-four-year outlook. Interestingly, yarn and apparel manufacturers are among the most confident, highlighting that supply-chain diversification, shifting sourcing strategies and improved market access will create sustained opportunities for Indian producers. Yet this optimism also has a down side as only 42 per cent believe India can achieve the government’s $100-billion textile and apparel export target by FY31.

The contrast is important. The industry appears convinced about its long-term competitive opportunity, but less certain that capacity, infrastructure, policy execution and ecosystem development can scale quickly enough to convert that opportunity into exports.

The $100 bn arithmetic

India’s textile and apparel exports stood at $36.1 billion in FY26, according to the Wazir assessment. Reaching $100 billion by FY31 would therefore require exports to grow at roughly 23 per cent annually.

Table: High long-term optimism, cautious export expectations

A 23 per cent CAGR is substantially higher than what incremental capacity increase alone can deliver. It would require India to simultaneously improve manufacturing scale, logistics, product diversification, productivity and access to major consumer markets. This explains why industry sentiment and export-target confidence are different. Companies may believe the global sourcing opportunity is real without believing that India's current industrial structure is fully equipped to capture it at the required speed.

FTAs change the investment equation

The strongest positive in the survey is the industry's assessment of free trade agreements. Almost 94 per cent view FTAs positively, suggesting that trade policy is influencing corporate investment decisions. The India-UK CETA, which came into effect in July 2026, is particularly significant because it improves the market-access equation for Indian textile and apparel exporters. The expected India-EU FTA, targeted to come into force by early 2027, could be even more consequential given the size and purchasing power of the European market.

The importance of these agreements extends beyond tariff reduction. For manufacturers, predictable preferential access can change the economics of capacity creation, product development and long-term customer commitments. Wazir’s findings indicate that investment intent is being aligned with anticipated FTA-driven opportunities rather than simply with present domestic or export demand. That marks a shift in corporate thinking. Companies are effectively investing ahead of demand because market-access conditions are expected to improve.

Investment moves ahead

The survey's 77 per cent investment-intent figure gives perhaps the clearest evidence that the industry's optimism is translating into business decisions. Nearly four out of five respondents plan to increase investment over the next 12-18 months, with home textiles emerging as the leading investment segment. This is significant because home textiles can benefit from both India's manufacturing capabilities and diversification away from concentrated sourcing bases. Apparel manufacturers are also optimistic, particularly as international buyers reassess sourcing geographies.

The policy environment is reinforcing this sentiment. Almost 80 per cent respondents believe current policies support industry growth, with home textiles and apparel manufacturers among the most optimistic. Schemes such as the Production Linked Incentive (PLI) scheme and PM MITRA textile parks are being viewed alongside improved global market access as components of a broader manufacturing ecosystem.

The challenge is to ensure that announced investment becomes productive capacity rather than merely incremental capacity. India needs stronger textile clusters, integrated supply chains, reliable logistics, faster customs processes, skilled labour and deeper capabilities in man-made fibres and value-added products if investments are to translate into export competitiveness.

Sustainability becomes the next test

The industry's weak confidence on sustainability readiness is the most notable counterpoint to the otherwise positive sentiment. European regulatory requirements are moving from voluntary sustainability positioning towards increasingly enforceable market-access conditions. The European Union's Ecodesign for Sustainable Products Regulation and Digital Product Passport framework are expected to become increasingly important during 2027-28.

For Indian exporters, this means competition will depend not only on price, quality and delivery but also on traceability, material disclosure, product-level data and environmental compliance. This could become a bottleneck precisely when India's export opportunity is growing. Small manufacturers, which form a substantial part of the textile system, may face higher relative costs in building digital traceability and compliance systems.

Optimism needs execution

The Wazir survey therefore gives a clear industry-confidence story. India's textile sector appears quite convinced that global sourcing is undergoing realignment in its favour. FTAs, diversification by international buyers and government-backed manufacturing initiatives are strengthening the opportunity.

But opportunity and export growth are not synonymous. The $100-billion target requires India to sustain export growth of about 23 per cent a year from a $36.1-billion FY26 base. That makes infrastructure, scale, productivity and ecosystem depth as important as tariff access.

The industry's 92 per cent optimism suggests that businesses believe the opportunity exists. The fact that only 42 per cent believe the export target is achievable suggests they are less convinced about the country's ability to execute at the necessary speed.

For policymakers, that gap is the central message from the sentiment barometer. The next phase of India's textile strategy cannot rely only on incentives or trade agreements. It must convert market access into globally competitive manufacturing capacity while ensuring that sustainability compliance does not become the next barrier to exports.