India’s textile sector sees capital expenditure surge to a 14-year high, driven by trade deal optimism and stronger export outlook.
The Indian textile industry’s capital expenditure has climbed to a more than 14-year high in the year ended December 2025, driven by strong new project announcements and improving global trade conditions, according to data analyzed by the Centre for Monitoring Indian Economy (CMIE).
Total new project announcements during the period stood at ₹44,019 crore (US$ 4.87 billion), marking the strongest rolling four-quarter capital spending in the sector since at least 2011. Industry analysts attribute the surge in investments to rising confidence among manufacturers and exporters amid recent trade developments.
Sentiment has been bolstered by the announcement of a trade deal with the United States, under which tariffs on Indian textile imports have been reduced from 50% to 18%. The move is expected to significantly improve the competitiveness of Indian textile products compared with rival manufacturing hubs such as Bangladesh and Vietnam.
Manoj Mishra, Partner at Grant Thornton Bharat, said capital expenditure in the sector is being supported by expectations of more favorable trade terms, including the proposed India–EU free trade agreement, which is expected to eliminate the existing 12% tariff on textiles once it comes into force.
Government initiatives have also contributed to the investment momentum. The Production Linked Incentive (PLI) scheme for textiles, with an approved outlay of ₹10,683 crore (US$ 1.18 billion), aims to stimulate investments by both large companies and MSMEs. Official data show that participating firms have already reported meaningful investments, along with strong turnover and export performance.
Several listed textile companies have confirmed ongoing capital commitments, with Page Industries announcing expansion-related investments and Gokaldas Exports continuing to deploy capital across multiple states.
Market observers note that while tariff-related uncertainties had earlier weighed on certain segments, recent trade developments have improved sentiment and are likely to support further investments. The overall outlook for the sector remains cautiously optimistic, barring any major reversals in global trade conditions.
News Courtesy : Apparel resources