TEXTILE INDUSTRY LANDSCAPE

Textile and Apparel Industry in Serbia
and the Western Balkans

INDUSTRY IN SERBIA
AT A GLANCE

Long-standing industrial tradition

Serbia and several Western Balkan economies have a long-standing textile and apparel manufacturing tradition, rooted in decades of industrial production and export-oriented operations.

The sector has evolved from large state-owned systems to predominantly SME-based structures, maintaining technical know-how and skilled labor despite structural transitions.

A major source of employment, particularly in regional and semi-urban areas.

In 2024, the textile, apparel, leather and footwear industry employed 55,433 people, from which

– 31.915 In apparel manufacturing,
– 11.850 in textile production, and
– 11.668 in leather and footwear.

Strong export orientation toward EU markets

Total exports of textile, apparel, leather and related products to EU amounted to approximately EUR 1.6 billion, representing around 5.3% of Serbia’s total goods exports.

Dominance of SMEs and subcontracting models

In 2024, the sector included 1,601 active companies, with approximately 6,238 entrepreneurs (sole proprietors).

The industry structure is predominantly SME-based, with a high share of micro and small enterprises.

Source: Chamber of Commerce and Industry of Serbia (PKS)

PRODUCTION STRUCTURES
AND BUSINESS MODELS

CMT and Contract Manufacturing Dominance

Cut-Make-Trim model still prevalent

Limited own-brand development

High dependency on EU buyers

The continued prevalence of CMT and contract manufacturing reflects strong operational flexibility and integration into EU supply chains.

Moving toward full-package production, design capabilities, and value-added services represents a key opportunity for upgrading margins and long-term competitiveness.

SME-Based Ecosystem

Fragmented production base

Limited vertical integration

Informal cooperation networks

A predominantly SME-based structure enables agility, specialization, and rapid adaptation to changing buyer demands.

Strengthening horizontal cooperation, cluster development, and shared service platforms could significantly improve scale, efficiency, and innovation capacity.

Regional Distribution

Manufacturing clusters outside capital cities

Importance for local employment and social stability

Manufacturing clusters outside capital cities create opportunities for balanced regional development and workforce retention.

Targeted investment in infrastructure, skills development, and modernization programs can transform these clusters into competitive nearshoring hubs aligned with EU sustainability standards.

Competitive Strengths

Competitive labor costs within European context

Skilled workforce with technical know-how

Geographic proximity to key EU markets

Established export infrastructure

WB & EU

Structural Constraints

Low margins in subcontracting models

Limited investment in innovation and branding

Aging machinery in part of the sector

Energy efficiency and environmental compliance gaps

Sustainability Readiness and Transition Gaps

Increasing exposure to EU regulatory frameworks
(ESPR, CSRD, due diligence)

Limited internal compliance capacities among SMEs

Growing demand for traceability and transparency

REPPAREL POSITION

Need for modernization and digital tracking systems

Financing barriers for green transition

Skills upgrading requirements

EMERGING DEVELOPMENTS
AND INnOVATION

Pilot initiatives in circular economy

Small-scale sustainable material innovation

Growing awareness of ESG standards

Potential for regional collaboration in recycling and reverse logistics