The apparel industry plays a significant role in India’s manufacturing, employment generation, and export-oriented economic development, with small and medium-sized enterprises (SMEs) constituting an important part of the sector. However, the adoption of digital technologies among SMEs remains constrained by financial, technological, infrastructural, and skill-related challenges. Against this background, this study examines the awareness of digitalization among Indian apparel SMEs, identifies the major challenges associated with technology adoption, and explores the role of government support in facilitating digital transformation. The study adopts a qualitative and descriptive approach based on interviews with 28 apparel manufacturing SMEs located in Delhi NCR, Bengaluru, Tirupur, Ludhiana, and Jaipur. The findings indicate that most participating firms are aware of digitalization and recognize its potential benefits; however, their depth of knowledge and level of adoption vary considerably. Technologies such as CLO 3D, CAD/CAM, automated cutting, IoT-based supply chain tracking, and digital printing are being adopted selectively. High investment costs, limited return on investment for smaller production volumes, shortage of skilled personnel, inadequate training, infrastructure limitations, and the absence of mandatory buyer requirements for certain technologies remain major barriers. Rather than investing directly in expensive digital infrastructure, several SMEs rely on third-party service providers for specialized digital activities such as CLO 3D design, CAD/CAM and supply chain tracking. The findings suggest that a phased and need-based digitalization strategy, combined with accessible technology services, industry-oriented training, and appropriate financial and institutional support, can enable apparel SMEs to improve competitiveness, operational efficiency, and sustainability. The study contributes to the understanding of practical digitalization opportunities and constraints within India’s apparel SME sector and provides directions for future research on the measurable business outcomes of digital technology adoption.