This review paper discusses the diversity of the textile sector in India, including its nature, the number of stakeholders and its effect on the overall national economy. It focuses on the significant role the coloration industry is expected to play in the near future, as this is the most problematic step in textile production with respect to profitability, planning and technology. While carrying out analysis of the textile and clothing industry, it also deals with the transformation the industry has undergone in the last two decades in terms of the selection of textile product mix in different regions of India from the point of view of profitability, the use of modern technology and selection criteria of colourants and specialised chemicals. These changes are viewed in respect of improved quality demands, measures undertaken to minimise the pollution level of the environment, and other related factors. In parallel, the growth of the dyestuff and speciality chemical industry, which has a direct relationship with this industry, is also discussed. It attempts to reflect upon the efforts of the Indian government in encouraging modernisation of the textile processing industry in terms of the Technology Upgradation Fund Scheme and other policy supports in relation to the response from the industry. Finally, the paper highlights the amount of human resource development needed to achieve the ambitious targets the government has put before the textile and clothing industry.