China Is Losing Its Grip on Global Apparel. These Indian Textile Stocks Are Filling the Gap.

China Is Losing Its Grip on Global Apparel. These Indian Textile Stocks Are Filling the Gap.

While markets brace for the RBI MPC decision this week, a quieter structural shift is underway that could reshape Indian textile stocks for years. A new Nuvama report highlights that China is steadily losing its share of the global apparel market — and India is emerging as one of the biggest beneficiaries.

The big picture: China's share is shrinking

The numbers are stark. Per Alok Industries' FY26 annual report, US textile and apparel imports from China dropped from US$28 billion in 2024 to US$19 billion in 2025 — a 32% decline in a single year. Meanwhile, Vietnam's exports to the US rose from US$16 billion to US$18 billion, and India held steady at around US$10 billion.

This isn't a one-year blip. Pearl Global Industries' investor presentation notes that China's share of textile and apparel exports "continues to decrease across geographies" since 2021, with its share in the US apparel market falling by 2% and in the EU by a similar margin.

What's accelerating the shift now is a convergence of three forces: sustained US tariffs on Chinese goods, the India-UK FTA that commenced on July 15 (removing 8-12% tariff disadvantages for Indian textiles), and the India-EU FTA agreed for implementation in 2027 that will give zero-duty access to the world's largest premium textile market.

Who's capturing the opportunity

K.P.R. Mill (KPRMILL) is the bellwether. This vertically integrated player (yarn to garments) reported FY26 PAT of Rs 866.50 crore on revenue of Rs 6,387.9 crore, with EBITDA margins holding above 20%. Per their Q3 FY26 investor presentation, revenue from operations hit Rs 1,500.92 crore with EBITDA of Rs 328.01 crore (21.9% margin). Europe accounts for about 59% of their exports and North America 19%. Critically, per their FY25 annual report, India's textile exports grew 6.32% in FY25, with the apparel segment as the main growth driver — and KPR sees the US tariff structure as giving India "better market access" compared to its competitors. Pearl Global Industries (PGIL) delivered record numbers in FY26: revenue of Rs 5,025 crore (up 11.5% YoY), EBITDA of Rs 468 crore (up 14%), and 78.1 million pieces shipped versus 74.3 million the previous year. Per their FY26 investor presentation, installed capacity has reached 101 million pieces, with ongoing expansion of 5-6 million pieces in Bangladesh and 2.5-3.5 million in India. Their ROCE improved to 29% in H1 FY26. With factories across India, Bangladesh, Vietnam, Indonesia, and Guatemala, they supply Kohl's, Macy's, Target, and Gap — exactly the kind of diversified sourcing that retailers are now demanding. PDS Limited (PDSL) offers a unique angle as a global sourcing platform. Their MD Pallak Seth noted in a July 2024 earnings call that India represents just 5-7% of sourcing for most major global retailers — but "anyone looking at 15% minimum in the next 2-3 years." PDS acquired India-based Knit Gallery (40+ million pieces annual capacity) to bolster its India manufacturing base. At 60% import duties, Seth said, China becomes "uncompetitive and unsustainable" — and the raw materials from China flowing to other countries means India's vertically integrated supply chain is a genuine advantage. Welspun Living (WELSPUNLIV) crossed the Rs 10,000 crore revenue mark in FY25, with consolidated revenue of Rs 10,697 crore (up 8.9%). Home textile exports specifically grew 10.8%, with Q2 FY25 export EBITDA margins at 16%. They're doubling down on the US market with a US$12.5 million automated pillow manufacturing unit in Ohio and Rs 326 crore of capacity expansion at their Anjar towel facility. Trident Limited (TRIDENT), one of the largest terry towel manufacturers globally, is another play on the home textiles shift. With exports accounting for roughly 60% of revenue and a vertically integrated yarn-to-finished-goods model, they're positioned to benefit from the India-UK FTA's removal of 8-12% tariff disadvantages on home textiles.

The FTA tailwind is underrated

Per GHCL Textiles' July 2026 investor presentation, India's textile exports to the UK alone are projected to grow approximately 58% over 3-5 years following the FTA. The India-EU FTA, expected to take effect in 2027, would eliminate 8-12% tariffs across cotton products, man-made fibers, ready-made garments, and home textiles — neutralizing the prior advantages held by Bangladesh and Pakistan.

Meanwhile, Maral Overseas' FY26 annual report shows that cotton yarn contribution margins improved from Rs 90/kg in FY25 to Rs 97/kg in the first eight months of FY26, as yarn realisations rose while cotton prices stayed relatively subdued. This favourable input cost environment, combined with expanding export access, is creating a margin tailwind across the sector.

What retail investors should do

The China-to-India sourcing shift is not a trade — it's a multi-year structural trend backed by government policy (FTAs with UK, EU, and potentially Canada), tariff realignment in the US, and genuine capacity expansion by Indian companies. For exposure, consider the spectrum: large integrated players like KPR Mill for stability, Pearl Global for pure-play garment export growth, and Welspun Living or Trident for home textiles. Watch for Q1 FY27 results this week from several textile companies — the first quarter under the new India-UK FTA could show early signs of order flow acceleration. The risk? A global demand slowdown or rupee appreciation could blunt the competitive advantage. But with China's share structurally declining and India's trade agreements multiplying, the sector's tailwinds are the strongest they've been in a decade.

Data sourced from company filings on NSE via Xaro.