India’s textile industry recorded its strongest capital expenditure cycle in more than 14 years in the year ending December 2025, driven by a surge in new project announcements and a steadily improving global trade environment, according to data analysed by the Centre for Monitoring Indian Economy (CMIE).
Total new project announcements during the period reached Rs. 44,019 crore (US $4.87 billion), marking the highest rolling four-quarter investment level since at least 2011.
Industry experts say the sharp rise reflects renewed confidence among manufacturers and investors after a prolonged phase of trade uncertainty and subdued global demand.
A major catalyst behind the investment momentum has been the recent trade agreement between India and the United States, under which Washington agreed to reduce tariffs on Indian textile imports from 50% to 18%.
The move is widely seen as a game-changer for Indian exporters, significantly improving price competitiveness against rival sourcing destinations such as Bangladesh and Vietnam, which have traditionally benefited from preferential market access.
According to Manoj Mishra, Partner at Grant Thornton Bharat, capital investment decisions are increasingly being shaped by expectations of more stable and favourable trade regimes.
He noted that the anticipated India–European Union Free Trade Agreement, which is expected to eliminate the EU’s existing 12% tariff on textile products, could further strengthen India’s export outlook once implemented.
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Government policy support has also played a critical role in reviving investment appetite. The Production Linked Incentive (PLI) scheme for textiles, with an approved outlay of Rs. 10,683 crore (US $1.18 billion), aims to promote large-scale manufacturing, attract fresh capital, and strengthen India’s position in global textile value chains.
Official figures indicate that participating companies have already committed substantial investments, translating into strong turnover growth and rising export volumes.
Several listed textile manufacturers have confirmed ongoing and planned capital commitments. Page Industries has outlined significant spending on capacity expansion and facility upgrades, while Gokaldas Exports continues to invest across multiple states to enhance production capabilities and meet rising international demand.
Market observers note that although tariff uncertainties had previously weighed on investment decisions particularly in export-oriented segments the recent trade developments have helped restore confidence.
With global brands diversifying sourcing bases and seeking alternatives to China, India is increasingly being viewed as a reliable long-term manufacturing hub.
Analysts maintain a cautiously optimistic outlook for the sector, with further investment likely if current trade tailwinds persist and global demand stabilises.
They caution that sustained momentum will depend on execution of trade agreements, continued policy support, and the absence of major disruptions in global trade conditions.
