India once dominated the textile trade. It needs institutions to make a mark again

The reform agenda for India is clear: Build an ecosystem approach to competitiveness. (File Photo) Few industries have shaped India’s civilisation as profoundly as textiles. Long before modern concepts of global value chains emerged, textiles were already woven into India’s economic, cultural and commercial fabric. Archaeological excavations at Harappa and Mohenjodaro (dating back 4,500 years) have uncovered spindle whorls, needles and dyeing artefacts, among the earliest evidence of textiles. What began in the Indus valley was sustained through centuries of trade, innovation and craftsmanship. For nearly two millennia, Indian fabrics clothed consumers across Asia and Europe. During the Mughal period, Bengal became the world’s premier centre for cotton textiles. Dhaka produced the legendary muslin prized by royalty across continents, while Murshidabad, famous for its silk and muslin, emerged as one of the 18th century’s wealthiest commercial centres. The economic significance of all this was immense. India accounted for one-fourth of global economic output in 1700, according to Angus Maddison. Then the Industrial Revolution happened, powered by James Hargreaves’ spinning jenny and other mechanised weaving technologies. These disruptive technologies changed the rules of the game, in this case competitiveness. Competitive advantage stopped being about artisanal skill and became about technology, productivity and economies of scale. India increasingly became a supplier of cotton to Lancashire mills and a market for manufactured textiles.Independent India’s textile journey has been an effort to reverse this. India today possesses a fully integrated textile value chain, from cotton to spinning, weaving, processing, garment manufacturing and exports. The key catch is the employment intensity of the sector. Apparel alone generates 153 jobs for every Rs 1 crore invested, against 27 in automobiles and 14 in steel. Yet its share of global apparel exports has stagnated at around 3 per cent for over two decades even as Bangladesh’s rose from 2.2 per cent to 9 per cent, Vietnam’s from 1 per cent to 6 per cent. How does a civilisation that once clothed the world end up with 3 per cent of a $521 billion global apparel market? This is the question our new book, Stitching India’s Apparel Export Strategy: From Farm to Foreign, released last week, sets out to answer. The book presents a comparative policy analysis of China, Bangladesh and Vietnam through five pillars of competitiveness: Scale and ecosystem, capital, labour and skilling, clusters and institutions, and market access and trade facilitation. The lesson from China is one of an ecosystem approach: Vertically integrated clusters, concessional finance and the Sinosure model of export credit insurance and institutional governance that transformed China into the largest apparel exporter. Bangladesh leveraged Least Developed Country (LDC) preferences through readymade garment (RMG)-specific finance, back-to-back letters of credit, and export processing zones offering plug-and-play infrastructure and one-stop regulatory services. Vietnam aligned foreign investment, industrial parks and free trade agreements (FTAs) into one integrated strategy and industry-academia partnerships to attract global manufacturers. Each country followed a different path, but all created integrated ecosystems that enabled firms to compete at scale. Besides all these aspects, one that is very important but much less talked about is the issue of undervalued Chinese currency. Estimates by the IMF, the US Treasury (2026) and Goldman Sachs suggest the yuan has been undervalued by 16 to 30 per cent against the US dollar, acting as an implicit export subsidy. To realise the government’s ambition of $100 billion in Textile and Apparel (T&A) exports by 2030, India must strengthen these fundamentals of competitiveness across the entire value chain. The first is scale and ecosystem development. The “missing middle” of mid-