What Happened
- India has displaced China to become the largest exporter of cotton products — including apparel, yarn, and home textiles — to the United States in 2025, according to USDA data.
- Total US imports of cotton products in 2025 stood at approximately 3.3 million metric tonnes; India supplied ~0.6 million tonnes, slightly ahead of China's ~0.5 million tonnes.
- The shift reflects both India's expanding textile production capacity and structural changes in US–China trade relations, including sustained tariff pressures on Chinese goods.
- Other major suppliers — Bangladesh, Vietnam, Pakistan, Mexico, Cambodia — remained below India and China in volume terms.
Static Topic Bridges
India's Textile and Apparel Sector
India's textile and apparel industry is one of the largest in the world, contributing approximately 2.3% of GDP and around 12% of total export earnings. The sector is vertically integrated — spanning raw cotton cultivation, ginning, spinning, weaving, processing, and garment manufacturing. This integration allows Indian firms to control quality and cost across the value chain, a structural advantage over countries that depend on imported yarn or fabric.
- India is the second-largest producer of raw cotton globally (after China), with ~6 million metric tonnes annual output.
- The sector employs approximately 45 million people directly and 100 million indirectly, making it the second-largest employer after agriculture.
- Cotton textiles alone contributed $11.49 billion in exports in FY2024-25.
- The US is the single largest export destination for Indian textiles, accounting for ~18% of total textile exports.
Connection to this news: India's vertically integrated cotton supply chain is the structural basis for the volume surge; the ability to offer competitive pricing from ginning through finished goods gave Indian exporters an edge when US buyers diversified away from China.
US–China Trade Tensions and Trade Diversion
Since 2018, the United States has imposed cumulative tariff rounds on Chinese goods under Section 301 of the Trade Act of 1974. Tariffs on Chinese textiles and apparel have ranged from 7.5% to 25%, materially raising the cost of Chinese cotton products in the US market. This has created a structural trade diversion effect benefiting India, Bangladesh, Vietnam, and other low-cost manufacturers.
- Section 301 tariffs on Chinese goods were first imposed in 2018 (US–China trade war) and have been maintained and expanded since.
- Trade diversion theory (UPSC Economics) describes how tariff barriers redirect imports from high-tariff to low-tariff sources.
- India's own FTA negotiations with the US have been pending since 2020; preferential access, if concluded, would further entrench India's position.
Connection to this news: India's displacement of China is not purely a function of India's competitiveness — it is also a consequence of deliberate US trade policy. Understanding trade diversion is essential for interpreting India's export surges in certain sectors.
India's Export Promotion Architecture for Textiles
The Ministry of Textiles oversees a range of production and export support schemes. The Production Linked Incentive (PLI) Scheme for Textiles (2021) targets Man-Made Fibre (MMF) and technical textiles, with an outlay of ₹10,683 crore. The PM MITRA (Mega Integrated Textile Region and Apparel) Parks scheme aims to develop 7 integrated textile parks with plug-and-play infrastructure, reducing logistics costs and improving competitiveness.
- PLI for Textiles: ₹10,683 crore outlay; targets MMF apparel and technical textiles.
- PM MITRA: 7 parks across states including Tamil Nadu, Telangana, Karnataka, Gujarat, Madhya Pradesh, UP, and Assam.
- TUFS (Technology Upgradation Fund Scheme) has supported modernisation of spinning and weaving capacity.
- Rebate of State and Central Taxes and Levies (RoSCTL) refunds embedded taxes on garment exports to improve price competitiveness.
Connection to this news: The government's support architecture has helped maintain cost competitiveness in global markets; the PM MITRA parks are designed to consolidate and scale up the very capacity that is now winning US market share from China.
Key Facts & Data
- India's cotton product exports to US (2025): ~0.6 million metric tonnes (No. 1 globally).
- China's cotton product exports to US (2025): ~0.5 million tonnes.
- Total US cotton product imports (2025): ~3.3 million metric tonnes.
- India's raw cotton production: ~6 million metric tonnes/year (2nd globally).
- Textile sector share of India's exports: ~12% of merchandise export earnings.
- Cotton textile exports: $11.49 billion (FY2024-25).
- Direct employment in textiles: ~45 million; indirect: ~100 million.
- PLI for Textiles outlay: ₹10,683 crore.