New Delhi: The government’s industrial output data, which showed robust growth in August this year, buoyed by the overall manufacturing sector’s performance, indicated a prolonged contraction in apparel production, even as the upstream textile industry logged firm upward momentum.
According to the Index of Industrial Production (IIP) released by the Statistics Ministry last week, overall growth in August 2026 stood at 8 per cent against 6.7 per cent in the preceding month.
Within the manufacturing sector, 18 of 23 industry groups have recorded positive growth in August 2026 over the year-ago month, the Ministry of Statistics and Programme Implementation (MoSPI) said in a statement.
Wearing apparel, one of the 23 manufacturing industries and the bellwether of India’s exports, has witnessed a contraction of 7.4 per cent in August and a cumulative year-on-year decline of 5.6 per cent during the April-August period of the current financial year.
In contrast, the textile industry, which feeds apparel manufacturing, has recorded a strong growth of 13.1 per cent in August and a cumulative expansion of 11.9 per cent in the current fiscal year so far.
Among the constituents of the broader benchmark IIP, textile production weighs 3.27 points and wearing apparel 1.97 points on a scale of 100, which includes 76 points under ‘Manufacturing’. Other industries such as ‘Mining & Quarrying’, ‘Electricity & Gas Supply’, and ‘Water Supply, Sewerage & Waste Management’ carry the remaining 24 points.
The gap between the production of upstream raw material manufacturers and the user industry in the downstream seems to be widening incessantly, irrespective of geopolitical situation, tariff uncertainties, and global macroeconomic conditions.
Explaining the divergent trend, A Sakthivel, Chairman of Apparel Export Promotion Council, said that the two indices cover different stages of production and therefore, “need not necessarily move in line with overall industrial output”.
“Textile manufacturing largely covers upstream segments such as yarn and fabric, where production is influenced by raw-material prices, inventory and intermediate demand. Yarn prices, for instance, have seen a significant increase recently.
“Wearing apparel is the final, value-added stage and is more directly linked to export orders, buyer inventories and global retail demand. With the global environment currently marked by geopolitical and trade uncertainties, apparel production can therefore respond more quickly to changes in external demand,” he said.
India’s textile and apparel industry has a strong domestic demand base alongside its export orientation. According to the Ministry of Textiles’ National Household Survey 2024, the overall textile market was estimated at Rs 14.95 lakh crore, of which the domestic market accounted for Rs 12.02 lakh crore – roughly 80 per cent.
India also aims to increase its apparel exports to USD 40 billion by 2030 from around USD 16 billion at present.
MOVING BACK AND FORTH:
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The barometer shows that the manufacturing of wearing apparel last year slipped by 2 per cent in September and over 7.3 per cent in October before rising 6.7 per cent in November and over 17 per cent in December. This year, the index recorded a sharp fall of 8.6 per cent in January followed by another 3.4 per cent decline in February.
What is more concerning is that a month after the outbreak of the US-Iran war, the index rose in March by 4.8 per cent sequentially but fell over 10 per cent in April.
During May and June, the index showed a growth of 3.6 per cent and 2.3 per cent. However, it contracted again in July and August by 2.3 per cent and 7.2 per cent, respectively.
At the same time, textile production logged steady growth month-on-month between August and December last year, except for a one-time fall of 7.7 pc in October 2025. This year, textile production saw a significant drop only in January (5.7 per cent) and February (24.2 per cent). However, it rebounded sharply by 48 per cent in March and stayed at the same level until August this year, notwithstanding the unstable geopolitical situation and unabated global trade disruptions through the Strait of Hormuz.
BROADER IMPACT:
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According to the National Accounts Statistics 2025, the textile and apparel sector accounts for around 2 per cent of the country’s GDP and 11 per cent of manufacturing GVA (Gross Value Added) on average over the last three years.
“A prolonged contraction in apparel manufacturing could affect manufacturing, value addition, exports, investment and employment, with implications for overall economic activity,” Sakthivel added.
According to industry players, the apparel industry continues to show resilience. Apparel exports were down 9.1 per cent during April-August 2026-27, reflecting the challenging global environment, but the pace of decline has moderated in recent months.
“The industry is also actively diversifying markets through new FTAs (free trade agreements) and expanding market access, while the upcoming festive season is expected to support demand. Thus, the current IIP numbers merit close monitoring, but they should be seen as reflecting the adjustment of a globally integrated, value-added industry to changing market conditions rather than as a broad-based deterioration in the sector,” the AEPC chairman said.
Despite challenges, apparel manufacturers, as well as exporters, are betting big on the upcoming festive demands from overseas and expect sales to pick up in the next couple of months.
Experts said that new FTAs and expanding market access are opening opportunities for market diversification, while India’s large domestic market, particularly with festive-season demand, provides an additional source of support.
They said that with the industry’s ability to adapt to changing global conditions, apparel manufacturing is expected to regain momentum and contribute positively to India’s growth going forward.
“The manufacturing growth is slow, but it is cyclical. The growth will pick up in two to three months. We are making Christmas orders at present,” said Sharad Saraf, a Mumbai-based exporter and CMD of Technocraft Industries.
Saraf, who also has a textile unit in Amravati, Maharashtra, said the manufacturing units need a skilled workforce permanently and must hire additional workers from time to time depending on the order book.
