-By Munindra Verma, CEO, M1 NXT
India’s textile and apparel industry is entering a crucial growth phase. With a target of achieving $100 billion in textile and apparel exports by 2030, the sector has become central to the country’s manufacturing and export strategy. Over the past few years, policy interventions such as the PM MITRA Parks, the Production Linked Incentive Scheme, National Technical Textiles Mission, and recent Union Budget measures have all aimed at strengthening India’s competitiveness as a global sourcing destination.
The strategy is timely. Global supply chains continue to diversify as businesses look beyond traditional manufacturing countries and destinations, creating an opportunity for India to expand its presence in international markets. India has the manufacturing capabilities, a large raw material base, established textile clusters, and a skilled workforce to meet growing global demand. However, increasing production capacity alone will not be enough to achieve the next phase of export growth.
The textile business operates on long working capital cycles. Manufacturers procure raw materials, process orders, ship products overseas and often wait 60 to 120 days before payments are realised. During this period, businesses continue to invest in fresh production, pay suppliers and meet employee costs. For many exporters, particularly MSMEs cash flow, rather than demand, becomes the primary constraint on growth.
The challenge has become more pronounced in recent years. Geopolitical tensions, supply chain disruptions, volatile freight costs and changing trade policies have increased uncertainty in global commerce. While export opportunities remain strong, managing liquidity has become just as important as managing production and supply chain.
Interestingly, the policy conversation is also beginning to reflect this shift. Recent Budget announcements around strengthening receivables financing, expanding the role of TReDS and improving access to invoice discounting recognise that faster access to working capital is essential for MSME growth. These reforms acknowledge that improving liquidity is as important as improving manufacturing capacity.
Yet, while domestic receivables financing is receiving greater attention, exporters continue to operate under a different set of challenges. Cross-border transactions involve longer payment cycles, overseas buyer risks and multiple financing requirements that conventional lending often struggles to address efficiently.
This is where International Trade Finance Services (ITFS), export factoring platforms are beginning to play an increasingly important role. By creating digital marketplaces that connect exporters with multiple domestic and international financiers, ITFS platforms enable solutions such as export invoice factoring, buyer’s credit and supply chain finance. Instead of waiting months for overseas receivables to be realised, exporters can unlock liquidity against approved invoices, improving cash flow without relying solely on traditional borrowing. Recent policy measures for supporting exporters with subsidy even for factoring products from IFSC/GIFT is a welcome step. In fact, reforms around provision for capital for a factoring transaction is a transformational idea being undertaken by IFSCA. With increasing attention to the GIFT City Ecosystem, strong measures like mandatory onboarding for Status Holder exporters on ITFS platform will go a long away in accelerating platform eco-system what’s being done for exporters. Now time is overdue for elevating Factoring eco-system in India given India’s Factoring book is not even 0.5% of GDP viz 20-30% of GDP for many larger economies like China, Germany, France, Spain.
For textile exporters, this means greater financial flexibility to procure raw materials, accept larger orders and expand into new markets without stretching their balance sheets. More importantly, it enables businesses to respond quickly to global demand despite uncertain market conditions.
India has already laid a strong foundation by investing in manufacturing capacity and export competitiveness. The next phase of growth will depend on strengthening the financial ecosystem that supports exporters. As the country works towards its $100 billion textile export ambition, building efficient trade finance infrastructure through innovations such as ITFS platforms could prove just as important as investments in factories, logistics and production.
