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India’s Growth Story Signals Opportunity For Textiles—But Execution Will Matter

• By  Textile Excellence
• February 01, 2026

The Economic Survey 2025–26 paints a picture of resilience amid global uncertainty, with India expected to sustain growth of 6.8–7.2% in FY27 despite rising geopolitical fragmentation, trade protectionism and cost pressures worldwide. For the textile and apparel sector, deeply embedded in global value chains, this macro stability offers both reassurance and a clear call to action.

Macro stability underpins manufacturing confidence

The Survey underscores strong macro fundamentals, anchored by disciplined fiscal management, steady private consumption and a sustained push on capital expenditure. Effective public capex has risen from a pre-pandemic average of 2.7% per cent of GDP to around 4%, improving logistics, infrastructure and industrial connectivity.

This translates into lower transit times, improved port and rail efficiency, and a gradual reduction in logistics costs, long a competitive handicap for Indian exporters. Manufacturing gross value added (GVA) growth has shown renewed momentum, with real manufacturing GVA accelerating through FY25 and FY26.

Consumption-led growth

Private consumption continues to account for over 60% of nominal GDP, providing a stable base for demand-driven industries such as apparel and home textiles.

Rising urban employment, over 61.9% of urban jobs are now in services - is supporting discretionary spending, especially in branded apparel, athleisure and home furnishings.

For textile manufacturers supplying the domestic market, this consumption resilience offers a hedge against export volatility. The message is clear: balancing export ambitions with sharper domestic-market strategies is no longer optional.

External trade: Resilience amid rising uncertainty

On the external front, the Survey notes that global trade policy uncertainty is intensifying, with restrictive measures outpacing trade facilitation worldwide. Merchandise exports have remained resilient in FY26 (April–December 2025), even as imports rose, reflecting steady domestic demand and investment activity.

For textiles and apparel - sectors vulnerable to tariff changes, non-tariff barriers and compliance regimes - this environment reinforces the need to diversify markets and products. India’s recent Free Trade Agreements and Comprehensive Economic Partnership Agreements provide potential tailwinds, but capturing value will depend on speed, compliance readiness and scale.

Employment reforms reshape the labour landscape

The Survey highlights a major structural shift with the consolidation of 29 labour laws into four labour codes, aimed at balancing worker protection with flexibility. Formalisation, fixed-term employment recognition and simplified compliance could be game-changers here.

Industry estimates suggest that effective implementation of these reforms could create up to 77 lakh jobs across sectors.

For apparel and made-ups, where seasonal demand and export cycles dominate, flexible yet formal employment frameworks could significantly improve productivity and compliance outcomes, provided states move swiftly on implementation.

Credit, MSMEs and the textile backbone

Access to credit continues to improve, with bank lending to micro and small enterprises maintaining a strong upward trend. Given that India’s textile ecosystem is heavily MSME-driven, this credit momentum is critical.

However, rising compliance standards, sustainability mandates and traceability requirements mean that credit availability must be matched with technical upgradation and skill development to prevent smaller firms from being squeezed out of global supply chains.

Sustainability, skills and the next leap

While the Survey focuses more broadly on industry, its emphasis on productivity, skilling and technology adoption is highly relevant for textiles. As medium- and high-technology activities account for a growing share of manufacturing value added, textiles must accelerate investments in automation, technical textiles, recycling and energy-efficient processes.

Equally important is skill alignment. The Survey’s focus on “getting skilling right” highlights the urgency of industry-led training models, particularly in apparel manufacturing, where quality, speed and compliance increasingly determine competitiveness.

The road ahead

The Economic Survey 2025–26 offers cautious optimism for Indian economy. Stable growth, infrastructure investment, labour reforms and improving credit conditions form a supportive backdrop. Yet, global trade headwinds, sustainability pressures and execution gaps remain real challenges.

For the industry, the opportunity lies in moving decisively - scaling up, modernising operations, and aligning with evolving global and domestic demand. In a world where resilience is as valuable as cost competitiveness, India’s textile sector has the macro tailwinds it needs. The next leap will depend on how effectively the value chain converts policy intent into on-ground performance.

The Economic Survey 2025–26 offers cautious optimism for Indian economy. Stable growth, infrastructure investment, labour reforms and improving credit conditions form a supportive backdrop. Yet, global trade headwinds, sustainability pressures and execution gaps remain real challenges.