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From $106 billion in FY25, India’s consumption of assorted textiles items and apparel grew to $147 billion in FY25 (CAGR 7%). In contrast, the exports grew at just 2% CAGR during the period to $37 billion, with a quarter of the goods shipped to the US.
Similarly, India’s food processing industry is already the sixth-largest in the world and is currently valued at $389 billion. This sector grew at an average of 3.9% a year in the last decade, thanks to massive capital investments and special support from the government, given its close linkage to agriculture and farmer incomes. Exports from the sector have been beating the odds but still pale in comparison to the large domestic market, with onward shipments of $51.9 billion in 2024-25.
“The domestic opportunity is immense,” said Kewal Chand Jain, director at KKCL, a branded apparel player. Jain said the company’s exclusive focus on its own brands and domestic business keeps it largely insulated from tariff-related disruptions.
Hurdles for export-oriented businesses
However, the story is also a bit complicated because units that have traditionally been export-oriented have product mixes and business strategies that could make it rather difficult for them to change tack. Siddhartha Rajagopal, executive director at Texprocil, said, “In the short run, at least until things settle down, the industry should look at alternative markets, including the domestic one,” Rajagopal added. The short-term strategy of exporters, according to him, may be to see if the alternative export markets and local demand could absorb the surplus ahead of the upcoming festive season.”
Industry sources also cited examples of prominent apparel and textile brands such as Arvind Mills, Welspun and Indo Count, which maintain some export presence, but focus mostly on the domestic demand. While exports in certain categories can yield higher unit realisations, domestic sales offer distinct advantages, according to Paresh Dattani, chairman and managing director at Sanathan Textiles, which has manufacturing units at multiple locations in the country.
“Lower logistics costs, shorter payment cycles and reduced exposure to currency fluctuations are key benefits (from focusing on the domestic market), he said. Recognising the stronger margins at home, Sanathan, which manufactures both cotton and polyester yarns, including “speciality” items, and technical textiles, has reduced its export share, with more yarns now being sold domestically. This has worked well – the company will start commercial production at its Punjab facility later this month, doubling its total yarn capacity.
Prabhu D, convener at Indian Texpreneurs Federation, said the domestic textile market will continue to expand. However, he cautioned that a shift from exports to domestic sales is “easier said than done” for many units due to differences in supply chains. “For instance, suppliers catering to Page Industries (a local retailer), won’t be the same as those supplying exporters,” he pointed out.
Pure-play export-oriented companies like Gokaldas Exports are among the worst hit by the tariff hike by the US, with immediate scope for diversification into the domestic market. However, only 40% of Arvind’s total business comes from exports. “Globally, the environment continues to remain volatile…Global supply chains and economic outlooks have been materially affected. Nonetheless, encouraging signs have been observed in domestic demand, which is expected to gain momentum in the upcoming festive quarters and into Spring 2026,” Arvind said in its FY25 annual report.
Sabyasachi Ray, executive director at Gems & Jewellery Export Promotion Council, said: “While it is not possible to entirely replace the US market, which accounts for nearly 30% of exports, the industry is working to diversify its customer base. Monthly order books for domestic gems and jewellery consumption are projected to be between Rs 70,000 crore-Rs 1 lakh crore in the near term, reflecting a strong demand from Indians.” He added that other international markets such as the UAE, the UK and Saudi Arabia will also aid exporters to cushion the blow from US tariff.
For exporters like Alkesh Shah, however, the situation is tricky. Shah, vice-chairperson at Goldstar Jewellery, said nearly 75% of the firm’s jewellery exports are directed to the US, while the remaining 25% goes to the UK. Since the production unit is based at the Santacruz Electronics Export Processing Zone, it isn’t easy to sell much in the domestic tariff area. “While we have no option but to sell domestically in the short-term, our domestic sales are treated as imports and face applicable customs duty. With Indian retailers paying lesser prices than US retailers, our overall margins also reduce by at least 3-5%. We urge the government to allow us to sell in the domestic market without added duties,” Shah said.
Gold jewellery remains one of the most favoured segments for Indian buyers, with demand volume seen to increase by 6% in the first half of 2025. Industry sources say that the segment that is likely to face the most headwinds would be diamonds, which is still to find a larger footing in India. Ashish Dhar, senior director-consumer & retail at 1Lattice, said, “India handles 70-80% of the world’s cut and polished diamonds. While the domestic demand for diamonds is growing, the market is significantly less than that for other jewellery, being valued at around $10 billion currently.”
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According to government sources, India being one of the largest producers of fruits, vegetables, millets, fish, foodgrain, milk and livestock globally, its food processing industry is going to grow steadily in the coming decade with rising consumer demand. Exports are largely limited to a few items like rice, buffalo meat, fruits and vegetables, marine and tobacco products. Experts say focus on production of quality rice and crop diversification to more remunerative and import dependent crops like pulses and oilseeds encouraged for achieving self-sufficiency.
However, reliance on the domestic market may not be feasible for some producers. For instance, buffalo meat exports hit a record $4 billion in FY25, but domestic consumption of such meat has not been robust because of dietary preferences.
India’s fisheries sector grew at over 8% annually in the last decade, with a substantial push from overseas demand. This has enabled the country to have the second slot fish producer. Rama Shankar Naik, commissioner of fisheries, Andhra Pradesh, said while the seafood industry has been hit hard by tariffs imposed by the US, the marine products industry must also look at augmenting supplies domestically to offset some of the anticipated losses in exports.