India Textile Sector Recovery

The Indian textile sector is entering a phase of recovery and renewed optimism, primarily driven by the normalization of US tariffs on Indian textile products to 10% in late February 2026, down from highs of 50%. This tariff reduction has restored global competitiveness for Indian exports and unleashed pent-up demand in the United States market. The sector's fundamentals have also improved, with capacity consolidation in spinning, restored cotton cost competitiveness, and stronger yarn spreads. Strategic Free Trade Agreements (FTAs) with key markets like the United Kingdom, European Union, and Australia are further strengthening India's position in global sourcing chains, as global buyers seek to diversify away from nations like Bangladesh and Cambodia. Despite potential challenges from geopolitical disruptions and crude-linked input costs, Dolat Capital's report suggests the sector is well-positioned for sustainable growth due to robust domestic demand and disciplined capital allocation.