China’s Textile Dominance: Competition, Collaboration, and Strategic Business Moves for India

Vivek Mehta
CEO and Managing Director
TextilesBazaar.com

• China’s role as a competitor and sourcing hub
• India-China trade relations and risks involved
• Opportunities for Indian businesses in the Chinese market

For decades, China has stood as the epicentre of the global textile industry. It dominates both in terms of production volume and scale, supplying nearly one-third of the world’s textiles and apparel. With its vast manufacturing infrastructure, integrated supply chains, and government-backed industrial clusters, China remains unmatched in its ability to produce at competitive costs and deliver speed-to-market efficiency. Beyond garments, it is also a crucial supplier of textile machinery, fibres,    and technical textiles, making it a vital sourcing hub for the global industry. 

However, the dynamics are shifting. Rising labour costs, stricter environmental regulations, and the growing scrutiny of supply chain transparency have started eroding some of China’s cost advantage. Global buyers are gradually diversifying sourcing destinations to reduce overdependence on one country—a trend that opens doors for India.

India’s textile sector maintains a complex relationship with China—marked by both dependency and competition. On one hand, India imports critical raw materials such as specialised yarns, synthetic fibres, dyes, and machinery from China. On the other, India directly competes with Chinese exporters in key international markets like the US, EU, and the Middle East.

The geopolitical environment further complicates this relationship. The border tensions between the two nations since 2020 have led to calls for reduced dependence on Chinese imports. At the same time, Indian manufacturers cannot fully disengage, given China’s dominance in supplying essential inputs at scale. For Indian businesses, this creates a dual challenge: managing risk exposure while leveraging China’s manufacturing ecosystem strategically.

Restrictions on Western China Provinces – Risks and Opportunities

A significant recent development impacting the global textile trade is the imposition of restrictions on products linked to Xinjiang, a western Chinese province known for its vast cotton production. The U.S., EU, and several other strategic markets have introduced regulations banning or restricting imports suspected of originating from Xinjiang, citing human rights concerns.

This has created a twofold scenario for Indian businesses:

• Opportunity: With global buyers seeking alternatives to Xinjiang-origin cotton and textiles, India is well-positioned as a reliable, transparent, and compliant supplier. Indian exporters can leverage this shift by emphasising traceability, ethical sourcing, and sustainable practices— areas where Western buyers are increasingly focusing.
• Risk: At the same time, Indian exporters dependent on raw material inputs from China must exercise caution. If these inputs have ties to restricted regions, Indian exports could face

scrutiny or rejection in the U.S. and European markets. This makes supply chain audits and documentation even more critical for Indian manufacturers.

Opportunities for Indian Businesses in the Chinese Market

While India competes with China in several areas, there are still significant opportunities for collaboration. As Chinese domestic demand grows, particularly for high-value textiles such as luxury fabrics, wool blends, and technical textiles, Indian manufacturers can tap into niche segments. India’s strengths in cotton, handlooms, artisanal fabrics, and premium wool-based suiting give it an edge in supplying specialised products to Chinese fashion houses and retailers.

Additionally, as China diversifies its sourcing to reduce reliance on its own cotton production, Indian cotton exporters can strengthen their presence. Joint ventures, technology partnerships, and cross-border investments could also provide strategic pathways for Indian businesses to integrate with China’s ecosystem while reducing direct competition.

Strategic Business Moves for India

To capitalise on the evolving landscape, Indian textile businesses should consider the following strategies:

1. Diversified Sourcing – Reduce reliance on Chinese inputs by investing in domestic capacity building or sourcing alternatives from Vietnam, Bangladesh, or Africa.
2. Supply Chain Transparency – Invest in traceability technologies such as blockchain-based supply chain systems to assure global buyers of ethical sourcing, especially in light of Xinjiang-related restrictions.
3. Market Positioning – Focus on India’s strengths—sustainability, heritage textiles, and premium quality fabrics—to differentiate from China’s mass-scale production.
4. Strategic Partnerships – Collaborate with Chinese firms where beneficial, particularly in technology and innovation-driven areas, without compromising on independence in core raw materials.
5. Geopolitical Awareness – Stay alert to shifts in global trade policies, tariff uncertainties, and buyer behaviour influenced by ongoing U.S.-China and India-China relations.

Conclusion

China’s textile dominance is undeniable, but the landscape is increasingly shaped by geopolitical realities, compliance-driven sourcing, and shifting buyer preferences. For India, this presents both challenges and opportunities. By strategically positioning itself as a reliable, ethical, and innovative alternative, India can not only reduce its dependence on China but also capture a larger share of the global textile market.

In a world where Xinjiang-related restrictions and tariff uncertainties are reshaping sourcing strategies, Indian businesses stand at a critical juncture. Balancing competition with collaboration and leveraging current geopolitical movements wisely can enable India to emerge stronger in the global textile value chain.

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