The majority of the textile industry is made up of the decentralized power loom, hosiery, and knitting industries. Contrasted with other industries in the nation, the textile industry is distinctive due to its tight ties to agriculture (for the supply of raw materials like cotton) and the old culture and customs of the nation. India's textile industry is capable of producing a wide range of goods that are suitable for various market niches both domestically and internationally.

While, on the other side, in India, the domestic garment and textile sector generates around 2% of the nation's GDP, or 7% of industry production in value terms. In 2020–21, textile, garment, and handicraft exports made up 11.4% of all Indian exports. India is one of the world's top producers of jute and cotton. 95% of the hand-woven fabric in the world comes from India, which is also the second-largest producer of silk in the world. According to estimates, the technical textiles market in India is about $16 billion, or around 6% of the worldwide market.

All along the value chain, from fibre, yarn, and fabric to garments, India's textile and apparel industry has strengths. The traditional handloom, handicrafts, wool, and silk items, as well as the organised textile industry in India, all make up the immensely diversified Indian textile and apparel market. Spinning, weaving, processing, and clothing manufacturing are all part of India's organised textile industry, which is characterised by the use of capital-intensive equipment for mass production of textile goods.

Textiles are eligible for 100% FDI (automatic route). A five-year, Rs. 10,683 crore ($1.44 billion) Production-linked Incentive (PLI) Scheme for synthetic fibre and technical textiles has been promoting and supporting the textile industry. Moreover, as of January 1, 2022, man-made fabrics (MMF), MMF yarns, and garments are subject to a uniform 12% goods and services tax rate announced by the Indian government.

By 2025–2026, the Indian textile and apparel market is projected to increase at a 10% CAGR, totaling US$190 billion. India accounts for 4% of global textile and clothing trade. The largest producer of cotton in the world is India. During the 2021–2022 cotton season, an estimated 362,18 lakh bales were produced. 338 lakh bales of cotton are anticipated to be consumed domestically in the 2021–22 cotton season. By 2030, India's cotton production is expected to reach 7.2 million tonnes (or 43 million bales of 170 kg each), spurred by rising consumer demand.

India produced 2.40 MT of fibre in FY21 (through January 2021), compared to 4,762 million kg of yarn during the same time period. India exported $44.4 billion worth of textiles and apparel (including handicrafts) in FY22, a 41% YoY increase. The US is India's single largest market, and 27% of its total exports in FY22 were textile and apparel. In FY22, ready-to-wear garment exports, including cotton accessories, were US$6.19 billion. A total of 4.5 crore people are employed in the textile sector in India, including 35.22 lakh people who work with handlooms.

Because of robust domestic demand as well as foreign demand, the Indian textile industry's future appears bright. India is pursuing a number of significant initiatives to grow its technical textile sector. Due to the outbreak, there is an increase in demand for technical textiles used to make PPE gear and suits. The sector is being supported by the government through financing and equipment sponsorship. Leading industry players are attaining sustainability in their products by creating textiles using recyclable natural resources.

In the last ten years, the retail industry has grown quickly due to rising consumerism and disposable money, as well as the introduction of major foreign businesses into the Indian market, including Marks & Spencer, Guess, and Next. Increased demand from industries including housing, hospitality, healthcare, and others will be a major factor in the expansion of the textile industry.