India has emerged as a premier location for apparel manufacturing, offering an unmatched combination of cost efficiency, robust supply chain infrastructure, a massive skilled workforce, supportive government policies, and a growing focus on sustainability. This report, aimed at clothing manufacturers, compares India’s advantages against other major apparel hubs – China, Portugal, Bangladesh, and Vietnam – and examines recent trends (2023–2025) in the context of the past decade. The evidence, drawn from reputable sources like the World Bank, McKinsey, WTO, and Indian government publications, demonstrates why India stands out as the best place in the world to manufacture apparel.

Cost Advantages: Competitive Edge in Pricing

India offers significant cost advantages in apparel production, primarily due to low labor costs relative to developed markets and even many Asian peers. Average wages for garment workers in India are a fraction of those in China or Portugal, enabling manufacturers to keep production costs low. In Bangladesh – known for some of the lowest wages globally – labor costs are slightly lower than India’s; however, India’s higher productivity and skill levels help narrow the gap. Vietnam’s wages are higher than India’s, reflecting its rapid economic growth, but still well below China’s. China’s labor costs have risen sharply in the last decade with economic development, reducing its traditional cost advantage in apparel​

documents1.worldbank.org​

documents1.worldbank.org. Portugal, as an EU country, has labor costs several times higher than any of the Asian producers, making it a hub for high-end or small-batch production rather than cost-efficient mass manufacturing.

Importantly, India’s total production cost remains very competitive when considering not just wages but also input costs and logistics. Being a major producer of cotton and textiles, India enjoys cheaper raw materials for its factories (more on this in the next section), further driving down the cost per garment. This integrated supply chain means Indian manufacturers spend less on importing fabrics or yarns, unlike competitors who must import these inputs (e.g. Bangladesh imports most fabrics). Moreover, global sourcing studies indicate that sourcing from Asian countries like India still offers the lowest “landed cost” (manufacturing + shipping) for Western buyers. Even when brands consider nearshoring to places like Portugal or Central America for speed, the total landed cost from those nearshore locations often ends up on par or higher than sourcing from Asia​

mckinsey.com. McKinsey notes that despite nearshoring’s lower shipping costs and tariff benefits, factors like lower labor productivity and the need to import textiles mean nearshore producers can’t significantly undercut Asian suppliers​

mckinsey.com. This underscores India’s cost advantage: Indian apparel factories deliver low unit costs without the hidden cost penalties seen elsewhere.

In summary, India strikes the optimal balance on cost – labor is inexpensive yet reasonably productive, domestic materials are readily available, and manufacturing overheads are low. For clothing manufacturers seeking to maximize margins, India’s cost profile is exceedingly hard to beat.

Supply Chain Infrastructure: Vertical Integration and Scale

One of India’s greatest strengths is its deep and well-developed supply chain infrastructure for textiles and apparel. India is unique in having a fully vertical apparel value chain domestically – from farming natural fibers to producing yarn, weaving fabrics, and final garment stitching, every step is available within the country​

asiagarmenthub.net. In fact, India has “a large raw material base and manufacturing strength across the value chain”, encompassing everything from traditional handlooms to one of the world’s largest modern mill sectors​

asiagarmenthub.net. This vertical integration gives India a big advantage over competitors like Bangladesh and Vietnam, which rely heavily on imported raw materials (adding time and cost). For example, India is one of the world’s top cotton producers, ensuring local availability of cotton fiber and yarn for apparel manufacturing. Bangladesh, by contrast, produces almost no cotton and must import most yarns and fabrics​

mckinsey.com​

mckinsey.com, increasing lead times and exposure to global price fluctuations. Vietnam has some textile capacity but still imports a large share of its inputs (especially fabrics and synthetic yarns) from China. Portugal’s textile industry is relatively small and depends on imported materials for many garments. Thus, India’s supply chain self-sufficiency translates into faster turnarounds and better supply security for manufacturers.

Beyond materials, India has been significantly upgrading its infrastructure and logistics to support the textile-apparel sector. The government launched a National Logistics Policy and major investments in highways, rail, and ports, recognizing that efficient logistics are key to competitiveness​

worldbank.org. India boasts multiple modern seaports (e.g. Mumbai, Chennai) on both coasts, facilitating faster shipping to Europe and the Americas. Recent government initiatives like the PM Gati Shakti program are improving transport connectivity and reducing bottlenecks in freight movement​

worldbank.org. Additionally, the creation of dedicated “mega textile parks” (PM MITRA parks) aims to provide world-class industrial infrastructure in integrated hubs​

pib.gov.in. Seven such parks launched in 2023 will offer plug-and-play facilities where spinning, dyeing, and garmenting units co-locate, further streamlining the supply chain​

pib.gov.in. This level of infrastructure focus is making India’s already strong supply chain even more resilient and efficient.

Comparatively, infrastructure challenges plague some of India’s competitors. Bangladesh’s transport and port infrastructure has struggled to keep up with export growth – congested roads and the lack of a deep-sea port have added “inefficiencies to garment lead time” in Bangladesh​

mckinsey.com​

mckinsey.com. (Shipping goods from Dhaka can take substantially longer; for instance, trucking to Chittagong port is slow due to highway congestion​

mckinsey.com.) Vietnam’s logistics are relatively better, but as a smaller country it cannot match the breadth of India’s internal market or its multi-port access. China historically has superb infrastructure, but rising internal costs and trade tensions have somewhat eroded its logistical edge. Portugal, being within Europe, enjoys excellent transport links to customers but cannot replicate the scale of textile clusters found in India.

In essence, India provides clothing manufacturers with an end-to-end solution: large-scale fiber production, extensive textile mills, and modern factories, all connected by improving infrastructure. This integrated ecosystem reduces dependency on imports and delays, ensuring manufacturers in India can source, produce, and ship apparel with speed and reliability that competitors find hard to match.

Workforce: Skilled, Plentiful, and Demographically Young

India’s workforce in the textile and apparel sector is one of the largest and most skilled in the world, offering manufacturers both scale and capability. The industry provides direct employment to over 45 million people in India​

asiagarmenthub.net – by far the largest apparel workforce among the comparison countries. (By contrast, Bangladesh’s garment sector employs about 4 million workers​

documents1.worldbank.org, and Vietnam’s around 2–2.5 million; China’s apparel workforce is sizable but shrinking with industrial changes, and Portugal’s textile workforce is only a few hundred thousand.) This huge labor pool means manufacturers in India can ramp up operations without labor shortages, even for large orders. It also means a deep bench of experienced supervisors, technicians, and managers is available to maintain quality and efficiency.

Crucially, India’s workforce is not just large but also comparatively skilled and diverse. The country has a long tradition of textile craftsmanship alongside modern technical education. As a result, Indian apparel workers and supervisors bring strong expertise in areas like pattern-making, embroidery, quality control, and complex garment assembly. Many Indian factories produce for demanding markets (US, EU) and meet stringent quality standards, speaking to the skill level. The labor force includes both highly skilled segments (e.g. tailors, designers) and a vast base of trainable young workers for basic stitching tasks. Notably, a significant portion of the workforce are women, providing vital employment opportunities and stability – women comprise roughly one-third of India’s textile-apparel workers​

documents1.worldbank.org​

documents1.worldbank.org, and in some garment hubs the majority of shop-floor workers are female. (In Bangladesh, women historically made up 80% of garment workers, though that has declined to ~54% in recent years​

textileinsights.in.) India’s demographic advantage – a young population with millions entering the labor market each year – ensures a steady supply of new workers to support industry growth.

Another often overlooked advantage is language and managerial capability. English is widely spoken among Indian management and technical staff, which facilitates smoother communication with international clients and partners. Many factory owners and managers in India are highly educated and globally savvy, which can make collaboration and compliance easier for foreign brands. This level of professional management combined with abundant semi-skilled labor gives India an edge in scaling up production without sacrificing control or quality.

In summary, India’s workforce offers apparel manufacturers an ideal mix: the scale to handle large orders (with 45+ million workers)​

asiagarmenthub.net, the skills and experience to meet high quality standards, and a favorable demographic trajectory that keeps labor supply and productivity growing. Compared to China’s aging (and increasingly costly) workforce or the much smaller labor pools in Vietnam, Bangladesh, and Portugal, India’s human resource advantage is a compelling reason to base apparel manufacturing there.

Government Policies: Strong Support for Textile Manufacturing

The Indian government has implemented a range of pro-business policies and incentives to promote apparel and textile manufacturing, making it easier and more attractive for manufacturers to invest and operate in India. Key policy advantages include:

• Liberalized Foreign Investment: India allows 100% foreign direct investment (FDI) in the textile and apparel sector under the automatic route (no special approval needed). This is one of the most liberal investment regimes in the world for apparel​asiagarmenthub.net. Foreign clothing manufacturers can set up wholly-owned factories or joint ventures freely, unlike in some countries with ownership restrictions.
• Production-Linked Incentive (PLI) Scheme: In 2021, India launched a dedicated PLI scheme for textiles, with a budget outlay of ₹10,683 crore (~$1.4 billion) over five years​pib.gov.in. The scheme provides financial incentives to manufacturers who achieve high volumes in specified categories like man-made fiber (MMF) apparel and technical textiles. The goal is to encourage large-scale investments, especially in synthetic fiber-based apparel where India historically lagged. Under this scheme, 64 companies have been approved with planned investments nearly ₹20,000 crore, aiming to add $26+ billion in new production and create ~250,000 jobs in coming years​pib.gov.in​pib.gov.in. This government support lowers the effective cost of expanding factories in India and spurs modern, efficient operations.
• Mega Textile Parks (MITRA): As mentioned earlier, the PM MITRA Parks scheme was launched to develop 7 world-class textile and apparel parks across India​pib.gov.in​pib.gov.in. These parks offer integrated infrastructure (power, water, effluent treatment, dormitories, logistics) and “plug-and-play” factory shells to investors. The government (central and state) provides capital for park development and will partner with private developers to maintain them​pib.gov.in. Each park is expected to attract large investments (₹70,000 crore or ~$8.5B across all parks) and generate hundreds of thousands of jobs​pib.gov.in. For manufacturers, this translates to ready infrastructure, easier compliance, and co-location synergies (producers of yarn, fabric, and garments in one campus), dramatically reducing setup time and costs.
• Tax and Trade Facilitation: India has improved its tax regime with the Goods and Services Tax (GST), simplifying the previous web of taxes and making inter-state movement of goods tax-neutral. Exporters can avail duty drawbacks and incentives, and many states offer their own tax breaks for textile investments. On trade, India has been negotiating free trade agreements to open major markets – e.g. ongoing FTA talks with the EU and UK promise to eventually reduce or eliminate tariffs on Indian apparel exports. While China and Vietnam currently benefit from some tariff advantages (Vietnam has an FTA with the EU, Bangladesh has duty-free access to EU under LDC status until 2026), India is actively closing this gap through diplomacy. The government also launched initiatives like the National Logistics Policy to cut shipping delays and the Trade Infrastructure for Export Scheme to fund last-mile connectivity, aiming to reduce trade costs and boost competitiveness​worldbank.org.
• Ease of Doing Business and Labor Reforms: Over the past decade, India has significantly improved its Ease of Doing Business rankings by streamlining business approvals, digitizing customs, and reforming labor laws. Labor law in India was traditionally complex, but recent reforms have consolidated numerous laws into simpler codes, providing more flexibility in hiring while ensuring worker welfare. Some competitor countries, like Bangladesh, have faced criticism for labor compliance issues in the past; India’s legal framework and democratic institutions, while not without challenges, provide a more stable foundation for ethical manufacturing. The government’s emphasis on “Make in India” and manufacturing-led growth means the policy environment is continuously being tuned in favor of industrial investors.

Collectively, these policies signal a strong government commitment to making India a global textiles and apparel hub. Manufacturers in India benefit from financial incentives, improved infrastructure, and a supportive regulatory climate, reducing risk and increasing profitability. Compared to China, where policy is now geared more toward high-tech industries, or Bangladesh and Vietnam, which offer incentives but on a smaller scale (and with less infrastructural backing), India’s policy support stands out for its scale and holistic approach. It addresses everything from investment and production to export logistics and workforce skills, creating an environment in which apparel manufacturing can thrive for the long term.

Sustainability and Compliance: Towards a Green, Ethical Supply Chain

Sustainability has become a key concern in the global fashion industry, and India is making significant strides toward green and responsible apparel manufacturing. For clothing brands and manufacturers focusing on environmental and social compliance, India offers several advantages:

• Renewable Energy and Resource Efficiency: Many Indian textile manufacturers are investing in renewable energy (such as solar and wind) to power their operations, especially in high-sunlight regions. India’s push for solar energy has led to cheaper renewable power availability for industries. Additionally, major apparel production centers in India have implemented resource-saving measures – for example, the Tiruppur knitwear cluster (a leading exporter of T-shirts) implemented Zero Liquid Discharge (ZLD) systems in its dyeing units to virtually eliminate water pollution in local rivers. Indian firms are adopting “3R” practices (reduce, reuse, recycle) in water and chemical use. Some large fabric and garment companies (e.g. Arvind Limited, Welspun) have developed their own water recycling plants and target significant reductions in water usage per garment. These efforts align with brands’ sustainability goals and often meet the standards of international initiatives like the Higg Index or ZDHC (Zero Discharge of Hazardous Chemicals).
• Organic and Sustainable Materials: India is a leading producer of organic cotton, giving it a strong footing as demand grows for organic and sustainably sourced raw materials. The government launched the Kasturi Cotton India initiative to standardize and brand Indian cotton (especially its long-staple cotton) with traceability – using QR code based certification to track cotton from farm to garment​pib.gov.in. This traceability and emphasis on responsibly grown cotton help manufacturers assure buyers of sustainable sourcing. In contrast, concerns over sourcing from places like Xinjiang in China (due to forced labor allegations) have led many brands to look for alternatives – Indian cotton and yarn are preferred substitutes due to clear provenance and ethical farming practices.
• Green Factories and Certifications: An increasing number of Indian garment factories are obtaining green building certifications (like LEED certification) and international compliance certifications (SA8000, WRAP, Fair Trade, etc.). India already hosts some of the world’s most advanced eco-friendly garment factories, with features like daylight harvesting, rainwater harvesting, and high-efficiency machinery. While Bangladesh has made headlines for green factory counts (thanks to concerted efforts after the Rana Plaza tragedy), India too has been steadily upgrading facilities. The Indian government encourages technology upgrades in this sector, which includes cleaner and more energy-efficient machinery (through programs like the Technology Upgradation Fund in previous years). Manufacturers in India can more easily partner with auditing firms and NGOs to improve their sustainability metrics, leveraging India’s robust professional services sector.
• Social Compliance and Worker Welfare: India, as the world’s largest democracy, has a strong framework for labor rights (minimum wages, prohibitions on child labor, etc.) and a free press that increases accountability. This means that factories are under greater scrutiny to maintain safe and fair working conditions. Many exporters operate out of export zones or industrial parks where compliance with international labor standards is strictly monitored (often buyer-driven compliance too). Notably, India has avoided major industrial disasters in the garment sector and has been proactive in factory safety improvements, partly learning from issues that affected neighbors. In Bangladesh, it took the Rana Plaza collapse (2013) to trigger sweeping safety reforms; India has been more pre-emptive, with state governments enforcing building codes and safety audits in manufacturing hubs. Additionally, India’s apparel workforce being more diversified (not exclusively dependent on apparel for livelihoods as in Bangladesh) means there is greater pressure to adhere to labor laws to attract and retain workers. All these factors contribute to a production environment with lower social compliance risks for brands – a point that even elevates Bangladesh’s appeal in the eyes of some fashion companies​shenglufashion.com. India offers the same if not better assurance on this front, given its stable institutions and legal system.

In summary, India is aligning its apparel industry with the global sustainability agenda, making it a future-proof choice for conscientious manufacturers. From green energy to ethical labor practices, India is rapidly enhancing its credentials. This focus on sustainability not only helps the planet but also adds to India’s attractiveness vis-à-vis China (which faces scrutiny over environmental and labor issues) and other low-cost locations. Manufacturers can confidently build a “green” supply chain in India to meet the rising demands of consumers and regulators for sustainable fashion.

Trends 2013–2025: India’s Rising Trajectory in Global Apparel

Looking at the trends of the past decade and the current outlook (2023–2025), it’s clear that India’s position in global apparel manufacturing is on a strong upswing, even as it learns from a mixed performance in the 2010s. Around 2013, India’s share of global apparel, textile, leather and footwear exports peaked at about 4.5% but then dipped to 3.5% by 2022​

newindianexpress.com. In contrast, competitors like Bangladesh and Vietnam saw their global share steadily climb – by 2022 Bangladesh held 5.1% and Vietnam 5.9%​

newindianexpress.com, both surpassing India. This happened due to Bangladesh’s rapid expansion as a low-cost producer and Vietnam’s emergence as a FDI-friendly, efficiency-driven hub. India, during that period, faced challenges like rising domestic costs and some lingering trade barriers, causing it to lose a bit of momentum​

worldbank.org. The World Bank noted that “rising costs of production and declining productivity” contributed to India’s export share slipping in late 2010s​

worldbank.org, just when China’s dominance was slightly receding.

However, the stage is set for India to capture a new wave of growth from 2023 onwards. Global apparel sourcing patterns are shifting in India’s favor for several reasons:

• “China+1” Sourcing Strategy: Geopolitical tensions and pandemic disruptions have prompted Western brands to diversify their sourcing away from over-reliance on China. India is a prime beneficiary of this trend. In a 2023 global survey of apparel Chief Procurement Officers, more than 40% of respondents plan to increase sourcing from India, Bangladesh, and Vietnam as the future hotspots​mckinsey.com. India stands out in this group because it can offer scale comparable to China. Brands that historically sourced mostly from China are now actively expanding orders in India to mitigate risk – a significant validation of India’s attractiveness. Indeed, even as China still accounts for a large chunk of apparel imports into the US/EU, its share is steadily dropping​mckinsey.com​mckinsey.com, and India is among the countries picking up that slack.
• Post-COVID Supply Chain Rebalancing: The COVID-19 pandemic exposed the vulnerabilities of concentrated supply chains. India’s robust handling of the pandemic in terms of maintaining production (many factories pivoted to PPE then back to apparel swiftly) showcased its reliability. As global demand rebounded in 2021, India’s apparel exports surged, and although a slowdown in late 2022 affected all manufacturers, Indian factories used the period to upgrade and prepare for the next boom​mckinsey.com​mckinsey.com. Now, with global demand recovering, India is well-positioned to capture orders. Notably, India’s domestic market has also grown strongly in the last 10 years, now one of the world’s largest fashion consumer markets. This provides manufacturers in India a buffer and additional volume, unlike export-only countries. The trend of global brands entering India’s retail market (e.g. Zara, H&M, Uniqlo opening many stores) also often translates to those brands sourcing Made in India collections for local and export sales.
• Bangladesh and Vietnam Challenges: Bangladesh and Vietnam, India’s closest competitors in cost, are not without constraints going forward. Bangladesh enjoys tariff-free access to Europe as an LDC, but this will likely end by 2026 as it graduates from least-developed status. Once Bangladesh starts facing EU import duties, its cost advantage will shrink relative to India. Additionally, Bangladesh is now dealing with higher wages demands (a new minimum wage review is underway) and has limited ability to diversify beyond basic apparel. Vietnam has seen wages rise and labor availability tighten; its population is only ~97 million (versus India’s 1.4 billion), so it cannot scale labor-intensive industries indefinitely without inflationary pressure. Vietnam also specializes more in technical outdoor apparel and sportswear (often with Chinese textile input), whereas India can cater to a broader product spectrum – from fast-fashion cotton tops to high-fashion embroidered gowns to home textiles – leveraging its diverse skills. These nuances mean India can capture niche areas and volume orders that others might not fulfill.
• Policy Reforms Bearing Fruit: The policy measures India undertook in recent years (PLI, logistics improvements, etc.) are beginning to pay off. New large factories focusing on synthetic garments are coming online in 2023–24 thanks to PLI incentives. The MITRA parks have attracted interest from multinational textile companies looking to invest in vertically integrated facilities. As these initiatives gain momentum, India’s efficiency and output are set to jump. The World Bank projects India’s overall economy to grow around 7% in FY2024/25 and continue robust growth through 2025–27​newindianexpress.com, creating a positive environment for manufacturing expansion. Additionally, any successful signing of major trade agreements (for example, an India-EU FTA currently under negotiation) would be a game-changer, instantly boosting India’s export competitiveness in high-value markets, something to watch in 2024–2025.
• Global Buyers’ Confidence: Perhaps the most telling trend is the qualitative shift in how global apparel buyers view India. Ten years ago, India was sometimes seen as a secondary sourcing option (after China or Bangladesh) for basic garments. Now, India is increasingly seen as a must-have sourcing base for a balanced portfolio. Executives cite India’s improving logistics, large supplier base, and political stability as reasons they feel more confident placing big orders in India. Case studies abound of international brands expanding sourcing in India: for instance, Ikea now sources a large volume of home textiles from India for its global stores, and companies like PVH and Inditex have publicly spoken of scaling up India sourcing. This confidence is partly due to the resilience Indian suppliers showed during disruptions – many kept deliveries going despite lockdowns by rearranging production, which impressed partners. As one McKinsey report summarized, “Bangladesh, India, and Vietnam are hotspots for future operations” in the apparel trade​mckinsey.com. India’s inclusion in that shortlist, with concrete plans by buyers to grow orders, indicates a very favorable trend line.

Over the 2013–2025 period, while India’s journey had early plateauing, the recent trajectory is clearly upward. China’s retreat from low-end apparel due to wage increases is an opportunity India is now capitalizing on​. Other beneficiaries like Bangladesh and Vietnam have grown, but they face ceilings that India can overcome by virtue of its size, resources, and reforms. Therefore, the period 2023–2025 is likely to mark India’s resurgence in global apparel exports, potentially increasing its world export share again after the dip. The country’s ambition to reach $100 billion+ in annual textile and apparel exports in the near future is backed by these trends, and many experts see India as the “next big engine” of apparel manufacturing growth globally.