Context: Engineering, textile and apparel exports increased by more than 6% in FY25

Source: The Hindu

Data released by the Union Commerce Ministry shows that exports of clothing, textiles, and engineering increased by over 6% in 2024–2025 compared to the year before.

In 2024–25, engineering products shipments reached $116.67 billion, up 6.74% from the previous year, whereas in 2023–24, they were $109.3 billion. Exports of clothing and textiles increased by 6.32% in FY25 over FY24. Exports of clothing, which increased by 10.03%, were the primary driver of the growth.

According to EEPC India, the engineering exports sector is expected to be negatively impacted by further U.S. taxes on iron and steel as well as auto components. The effects of the current conflict on trade tariffs are clearly apparent. The value of Indian engineering goods exports fell by over 4% year over year to $10.82 billion in March 2024 from $11.27 billion in the same month the previous year.

Model Question:

India’s engineering, textile and apparel sectors hold significant potential for export growth, yet they face structural challenges. Examine the reasons behind India’s underperformance in these sectors and suggest measures to improve their global competitiveness.

Model Answer:

India has long been a key player in global exports, particularly in the engineering goods, textiles, and apparel sectors. These sectors are not only labor-intensive but also critical for job creation, foreign exchange earnings, and industrial growth. However, despite their potential, India’s performance remains suboptimal.

Reasons for Underperformance:

1. Structural Bottlenecks: Fragmented supply chains and lack of scale, especially in apparel and textiles. Low technology adoption and insufficient product standardization in engineering goods.
2. High Logistics & Compliance Costs: Inadequate infrastructure, leading to delays and higher costs. Complex customs procedures and non-tariff barriers.
3. Stiff Global Competition: Bangladesh, Vietnam, and China offer cheaper, high-quality textile exports. Developed nations dominate high-value engineering exports due to R&D advantage.
4. Inconsistent Policy Support: Delays in RoDTEP and MEIS scheme benefits. Limited focus on skill development and design innovation.
5. Trade Barriers and Tariff Issues: Lack of Free Trade Agreements (FTAs) with key markets like the EU. Rising protectionism globally affecting market access.

Measures to Enhance Competitiveness:

1. Promote Cluster-Based Development: Strengthen textile parks and engineering SEZs with plug-and-play facilities.
2. Boost R&D and Innovation: Incentivize automation, design innovation, and green technologies.
3. Improve Infrastructure and Logistics: Expand multimodal connectivity through PM Gati Shakti.
4. Faster FTAs and Market Diversification: Finalize trade deals with the EU, UK, and Gulf nations.
5. Skill Development and Upgradation: Focused programs through Skill India tailored to sectoral needs.
6. Stable Export Incentive Framework: Streamline and timely disbursement of RoDTEP, PLI, and textile incentive schemes.

India’s engineering, textile, and apparel sectors have the ingredients to become global leaders. With a targeted policy push, technological upgradation, and market alignment, these sectors can not only increase exports but also emerge as engines of inclusive economic growth.