Indian textile industry may face $2.5–3 bn blow from US tariff Leaders urge Union government for immediate, cash-based export incentives to protect Indian textile industry. The crisis has underscored the urgent need for India to reduce its over-dependence on the US market and look for diversification as the key long-term priority, says Rakesh Rao. On Wednesday, August 6, 2025, US President Donald Trump announced an additional 25 per cent tariff on select Indian goods, effectively doubling the total duty on these products to 50 per cent. The initial 25 per cent tariff is scheduled to take effect from August 7, while the newly announced additional 25 per cent will be implemented from August 27. Industry experts warn that if enforced, the combined tariff could lead to an immediate loss of $2.5–3 billion for India’s textile and apparel sector. Prominent industry leaders caution that this move, if not addressed urgently, could severely disrupt India’s labour-intensive export economy, leading to widespread job losses and supply chain breakdowns. Industry reactions and possible triggers Industry leaders have expressed deep concern over the abruptness and scale of the tariff hike, with Rahul Mehta, Chief Mentor of the Clothing Manufacturers Association of India (CMAI), calling it “disastrous” and potentially fatal for Indian exporters. “No buyer will be willing to pay 30–35 per cent more for Indian products when they can source from Bangladesh or Vietnam at significantly lower prices,” said Mehta. While the industry hopes this is a part of the US’s typical negotiation strategy, the uncertainty has triggered concern among exporters. “Trump’s approach often involves announcing steep measures and then scaling them back. We hope this is a temporary shock tactic and not a final decision,” Mehta added. Reflecting on the possible US motives, Mehta suggested the tariff announcement could be part of a broader negotiation playbook. “We’ve seen this before. Even countries like China, Vietnam, and Bangladesh initially faced 30–40 per cent duties, which were later moderated. The fact that US negotiators are still scheduled to meet with Indian counterparts (on August 25, 2025) points to a possible rollback.” Raja Shanmugham, MD of Warsaw International, described the hike as part of an “unethical trade war” that is likely to hurt labour-heavy sectors like textiles, leather, and gems & jewellery. “It is a disruptive and unfair tactic. The US has strategically exempted imports critical to its economy, like electronics and pharmaceuticals, while targeting Indian products,” he added. Sanjay Jain, MD of TT Limited, linked the decision to geopolitical tensions, possibly India’s continued import of Russian oil. “If India caves to this pressure, it sets a precedent of giving in to economic blackmail. But if we don’t, we risk unemployment and recession in key export sectors,” he warned. What the government must do now The fallout of this tariff hike is already evident. According to Mehta, the US accounts for 30–35 per cent of India’s apparel exports, and this shock could result in an immediate loss of $2.5–3 billion. Jain pointed out that new orders from the US are likely to cease, while existing shipments will result in significant losses. “A 65 per cent effective duty (including previous tariffs) is unsustainable,” he stated. The disruption is expected to have a ripple effect. Cotton farmers, yarn spinners, garment manufacturers, and ancillary industries are all deeply interconnected. “The entire supply chain—from farm to factory—will be impacted. This is more than just a trade issue; it’s a national economic threat,” said Jain. The call for urgent government intervention is unanimous. All three leaders stressed the need for immediate, cash-based export incentives to protect ongoing operations and prevent industrial collapse. “Existing export programs cannot be halted due to this shock. The government must offer temporary support through differential incentives,” said Shanmugham. Jain agreed, noting that only financial aid could neutralise the damage. “We’re being hit with cash-based tariffs. The only effective counter is cash-based subsidies. Anything less won’t suffice.” According to Mehta, there are no quick fixes. “Even with new FTAs, like the one signed with the UK, the benefits will take time to materialise due to procedural formalities. Other global buyers will not suddenly increase their orders to compensate for the shortfall,” he said. Some industry experts are pushing for India to adopt reciprocal pressure tactics and suggest India to explore export duties on pharmaceutical products—a critical segment exempted from US tariffs but heavily dependent on Indian supply. “India supplies nearly 45 per cent of US pharma needs. Medicines aren’t easily replaceable. We must consider using this leverage strategically,” said Shanmugham. Long-term strategy: Diversify and de-risk The crisis has underscored the urgent need for India to reduce its over-dependence on the US market. Experts believe diversification as the key long-term priority. “India must broaden its export base both geographically and in terms of product range. We can’t rely on a single volatile market,” Mehta said. The European Union and the UK were cited as the most promising alternatives, with fast-tracking the India-EU FTA being a critical next step. Japan, Australia, and New Zealand offer further potential but require long-term relationship building and compliance with high standards. “Japan pays well but demands consistency. Indian exporters must evolve to meet such expectations,” he observed. Despite the grim short-term outlook, the leaders believe this could be a turning point for India’s export strategy. “The global economy is too interdependent for such extreme tariffs to last. In the end, American consumers will also bear the cost,” said Shanmugham. India’s strong domestic market, large workforce, and increasing global relevance position it well for a manufacturing renaissance—if the right policies are implemented swiftly. “With a potential workforce four times that of the US, India is poised for a supply chain transformation. But the government must seize this moment with bold and decisive action,” Shanmugham concluded. “This is not just about trade. It’s about protecting jobs, safeguarding our industrial backbone, and asserting India’s position in global commerce,” Jain added. The post Indian textile industry may face $2.5–3 bn blow from US tariff appeared first on Indian Textile Journal.

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Future on the Hanger Today, the Indian garment industry hangs like a garment on a hanger-balanced between uncertainty and possibility. Divya Shetty explores how by identifying and seizing the right opportunities, India can not only stay ahead in the global race but also redefine its role as a leader in the world of apparel. India’s garment industry is currently navigating a turbulent environment with notable resilience. Export performance is showing signs of steady recovery, supported by a 7 per cent increase in textile and apparel shipments between April and October of FY 2024–25. This growth is largely fuelled by strong contributions from ready-made garments (RMG) and man-made fabrics. India continues to be amongst the top five textile exporter and commanding around 4 per cent of global market share (see Table 1). However, the industry is grappling with a range of complex challenges, including global trade uncertainty reflected in fluctuating shipping costs, inconsistent import duties, and evolving tariff structures. Suketu Shah, CEO, Vishal Fabrics, says, “While US tariffs on competitors like Bangladesh and Vietnam may benefit India, they also introduce volatility in sourcing and pricing. Meanwhile, domestic policy changes such as cotton MSP hikes are raising raw material costs, compelling manufacturers to lobby for import duty relief to stay competitive. On the global front, the India–UK FTA promises duty-free access for Indian apparel and textiles, potentially boosting exports to the UK by 30–45 per cent but the gains depend on smooth implementation and regulatory hygiene .” Table 1: Trade Statistics April-May 2025 This volatility has shifted manufacturing pressures onto cost structures and working capital.  According to Naveen Sainani, Founder and Chairman, Fritz Gaitri Clothing Co, “The market is largely MSME-based and primarily dependent on the domestic sector, which focuses heavily on high-street retail and local brands. However, with the rapid expansion of organised retail — especially brands like Zudio and others across Tier 1, 2, and 3 cities — competition has intensified. This has resulted in reduced footfall for high-street shops. On the other hand, many manufacturers are shifting to FOB (Free on Board) and private label business models, but these also operate on very thin margins. So overall, it’s a tough time for Indian garment manufacturers, both in the domestic and private label segments.” In domestic market, factors like labour shortages and inability to innovate and adapt are also one of the main obstacle in growth. As compared to domestic market, international market is still performing better. However, geopolitical factors have made exporters more cautious.  Here are a few factors that have made the export situation more challenging. Global trade uncertainty, manifested through fluctuating shipping costs, variable import duties, and shifting tariff regimes, has shifted manufacturing pressures onto cost structures and working capital. Suketu Shah, CEO, Vishal Fabrics Logistics in limbo India’s garment export market is currently treading through a phase of uncertainty, with stakeholders adopting a wait-and-watch approach. While the industry has weathered many storms in the past, the current environment feels particularly unpredictable. It is imperative that India negotiates trade terms that offer a level playing field. Additionally, exporters must closely monitor policy developments and diversify product offerings to stay competitive amidst any tariff realignment. Dr Mukesh Kansal, Chairman, CTA Apparels Bangladesh border blues: The India–Bangladesh trade relationship is in turmoil following a series of reciprocal restrictions. Bangladesh has suspended key imports like cotton yarn via land ports, prompting India to ban Bangladeshi RMG and jute through the same routes. Exports are now funnelled only via specific seaports, disrupting supply chains and escalating tensions. Rahul Mehta, Chief Mentor, CMAI, further highlights this uncertainty by stating, “At present, there isn’t any significant disruption. However, some major Indian brands and retailers that were previously sourcing from Bangladesh are now shifting part of their orders to Indian suppliers. This shift is primarily due to two reasons; With the latest restrictions, importing from Bangladesh has become approximately 4–5 per cent more expensive.                The lead time has increased by 8–10 days, which affects delivery schedules. As a result, many buyers are choosing to divert some of their sourcing to domestic vendors. India has restricted apparel imports from Bangladesh to only pass through southern ports, whereas earlier, shipments arrived via Kolkata, which was logistically cheaper. This new routing adds to transportation costs. Additionally, Bangladesh’s domestic manufacturing costs are steadily rising due to increasing minimum wages and other operational costs. Although it still remains cheaper than India, the gap is narrowing. Many manufacturers are shifting to FOB (Free on Board) and private label business models, but these also operate on very thin margins. So overall, it’s a tough time for Indian garment manufacturers, both in the domestic and private label segments. Naveen Sainani, Founder and Chairman, Fritz Gaitri Clothing Co Bangladesh has also faced allegations of re-exporting Chinese fabrics to India at lower prices. Sainani quotes, “There has been strong opposition to the duty-free import of garments from Bangladesh, which are largely made using Chinese fabrics and accessories. Bangladesh, which does not produce its own yarn or fabric, imports these materials — mainly from China — and then re-exports them as finished garments. These finished products are entering India duty-free, putting Indian manufacturers at a disadvantage.” Tariff tremors from the US: India’s garment industry is facing a wave of turbulence in the wake of revised US tariff rates. Exporters are grappling with mounting uncertainty, prompting strategic reassessment across production, pricing, and market outreach. As strategies evolve, the sector braces itself for potential disruption and reorganizes to safeguard its hard-won export resilience. Dr Mukesh Kansal, Chairman, CTA Apparels, views the situation with a mix of optimism and concern, as he remarks “The revised US tariff structures pose both opportunities and challenges. On one hand, any reduction in duties for Indian products can be a major booster for our exports to the United States, which remains our largest apparel market. On the other hand, if preferential tariffs are extended to competing nations without reciprocal benefits for India, we risk losing market share. It is imperative that India negotiates trade terms that offer a level playing field. Additionally, exporters must closely monitor policy developments and diversify product offerings to stay competitive amidst any tariff realignment.” In real terms, this affects our pricing strategy, inventory planning, and cash flow cycles. To adapt, the companies are exploring diversified markets, negotiating longer-term contracts with customers, and engaging with the government to fast-track tariff relief. Ultimately, the current environment demands both agile execution and close policymaker engagement. Shah explains, “As the head of a textile firm, I see the US revising its tariff structure as both a challenge and a strategic pivot point. The current 26 per cent reciprocal tariff on Indian textile imports significantly raises our landed costs. That spells immediate pressure on margins, either we absorb some of the burden, or we pass it on, risking US order volumes. Yet, these higher tariffs also lean in our favour compared to rival exporters- while we face 26 per cent, competitors like Vietnam (46 per cent), Bangladesh (37 per cent), and China (34 per cent) are hit harder. Clients in the US are starting to shift orders from those destinations to India, and our textile stocks even saw an uptick immediately after the announcement. However, uncertainty remains high. The US has paused the implementation of higher duties, and a narrow “mini-deal” with India could be reached by the end of July that may reduce our trade friction to under 20 per cent.” Impact of India-UK FTA: The UK–India Free Trade Agreement (FTA) represents a significant milestone for India’s garment industry. With the removal of tariffs ranging from 12–16 per cent on apparel exports to the UK, nearly all Indian garments will gain duty-free access—on par with competitors like Bangladesh and Vietnam. This is expected to drive a 30–50 per cent surge in exports to the UK over the next five years. The agreement presents a major opportunity for India’s key textile hubs, which are heavily SME-driven and provide employment to millions. Reduced duties will enhance the price competitiveness of Indian products, allowing exporters to improve profit margins or offer more competitive pricing. However, the agreement must clear Parliament in both countries, implementation could be delayed by up to a year. Exporters must also meet rules-of-origin and quality standards, and ensure compliance with UK regulations reopening trade channels. “Longer term, the FTA supports India’s ambition to double its trade with the UK to US $100–120 billion by 2030. The garment industry stands to gain on employment, investment, and global integration, provided it modernises production, strengthens compliance infrastructure, and prepares itself for a ramp-up in volume and quality standards in a competitive UK market,” comments Shah. Duty-free or reduced-duty access, especially compared to competitors like Bangladesh, China, Vietnam, and Cambodia, would offer Indian exporters a huge advantage. Rahul Mehta, Chief Mentor, CMAI Sainani also feels that the India-UK Free Trade Agreement will be a very positive move and is expected to benefit the Indian garment industry significantly, particularly in enhancing regional trade and competitiveness. According to Kansal, “The European Union and the United Kingdom stand out as promising alternatives. These markets offer transparent trade regimes and are placing heightened emphasis on sustainability, ethical sourcing, and compliance. Their structured and predictable procurement models, coupled with a growing demand for high-value products, make them compelling destinations for both risk diversification and long-term growth.” Beyond the commercial upside, the FTA is expected to generate employment, foster domestic value addition, and promote the adoption of sustainable and ethically aligned manufacturing practices in line with international benchmarks While the UK is not as large a market as the US or EU for Indian garments, it’s still a significant importer. Previously, countries like Bangladesh had a competitive edge in the UK market. Now, with the FTA, Indian exporters can compete more effectively. As for UK garments entering India, those are typically high-end products and unlikely to pose serious competition to domestic players. Eyeing India-US FTA: While discussions of India-US FTA have intensified in 2025—with multiple rounds of talks completed and a roadmap outlined by both governments—a full-fledged FTA remains under negotiation. An interim trade deal was expected, but recent reports suggest delays due to disagreements on tariff structures, labour standards, and digital trade rules. Both sides remain engaged, aiming for a mutually beneficial agreement, though the timeline for a formal FTA remains uncertain. But the industry is truly looking forward for this FTA as it can drastically change the landscape of Indian garment industry. Mehta explains, “If implemented, an India-US FTA would be a true game changer. Currently, the US accounts for 30–35 per cent of India’s total apparel exports. Duty-free or reduced-duty access, especially compared to competitors like Bangladesh, China, Vietnam, and Cambodia, would offer Indian exporters a huge advantage. Even MSMEs would benefit, as many exporters source their goods from them. Moreover, MSMEs that meet compliance standards could directly export to the US as well.” Kansal, on the other hand, points out that these on-going discussions are affecting the logistics of garment movement. He says, “The on-going ambiguity surrounding the India–US Free Trade Agreement is beginning to cast a shadow over India’s apparel export landscape. In the absence of a clear and consistent policy framework, global buyers are growing increasingly cautious. This hesitancy is translating into deferred commitments, shorter procurement cycles, and tighter lead times, making it harder for Indian exporters to remain price-competitive, especially against peers in nations with established trade agreements with the United States.” The domestic drag Growth has slowed. While the sector is still expanding, the expected pace hasn’t materialised. Consumers are increasingly moving toward value-for-money products, and even premium brands are resorting to discounts and aggressive promotions to stay competitive. This trend has led to a dip in realisations and margins. Here are a few factors that are impacting the domestic market; * Rising input costs: Fluctuating prices of raw materials like cotton and man-made fibres are squeezing profit margins. * Labour shortages: Key garment hubs such as Tiruppur and Ludhiana are facing a lack of skilled workers due to migration and demand-supply gaps. * Infrastructure bottlenecks: Inadequate logistics, transportation delays, and limited warehousing capacity increase production costs and lead times. * Limited access to finance: Many SMEs, which dominate the industry, struggle with working capital and access to credit, despite supportive schemes. * Policy and compliance challenges: Frequent changes in GST, quality control orders, and regulatory norms create uncertainty and increase compliance burden. * Changing consumer preferences: The rise in demand for sustainable and fast fashion is forcing manufacturers to innovate quickly, often at higher costs. * Digital and tech adaptation: Although many players are embracing automation and digitalisation, smaller units find it difficult to invest in new technology. * Impact on competitiveness: These domestic hurdles limit the industry’s ability to compete globally and make the most of emerging export opportunities. Future-proofing the industry To boost garment exports in today’s global trade scenario, we need a clear, multi-pronged approach. “First, simplify incentives like RoDTEP and RoSCTL, ensure these schemes are transparent, easily accessible, and linked to quick real-world benefits for exporters rather than complex paperwork. Second, to accelerate Free Trade Agreements, both the UK‑India and approaching US negotiations must be turned into firm reorder advantages by eliminating tariffs at the earliest. Tariff-free access will directly translate into improved order flow and pricing power. Third, investing in cluster-based infrastructure improvements, upgraded common facility centres, logistics hubs, and cold chains near garment clusters will reduce lead times and shipping costs. That builds a factory-ready ecosystem. Fourth, support technology adoption among SMEs, offer rebates for automation, compliance tools, and digital platforms so smaller units can meet global standards in quality and delivery,” concludes Shah. Measures such as strengthening trade diplomacy, leveraging Indian Missions for real-time market intelligence, addressing sudden non-tariff barriers, and facilitating dispute resolution for exporters can significantly streamline export processes. Combined with enhanced export incentives, effective FTAs, improved infrastructure, SME support, and proactive international engagement, these steps can position India’s garment industry for sustained global growth. Sainani also suggests that the government needs to focus on developing micro-clusters rather than only large-scale projects. While initiatives like the PLI scheme for investments above Rs 1 billion are welcome, about 95 per cent of Indian garment manufacturers fall under the MSME category. A targeted approach with policies, subsidies, and compliance support for MSMEs will go a long way in enhancing their capabilities, especially in exports. Empowering the MSME sector is critical for the overall growth of the Indian garment industry. Mehta expresses confidence in the future of the Indian garment industry, stating that, “The long-term future remains bright. India has a growing, young population, rising urbanisation, and a robust GDP growth trajectory. However, businesses will need to evolve. Models must shift, and companies must adapt to changing market dynamics. Those who fail to keep up may struggle, but the industry as a whole is poised for sustained growth.” The Indian garment industry stands at a promising juncture, with several opportunities ready to be tapped. With its vast workforce, strong manufacturing base, and growing global reputation for quality, India has the potential to become a global apparel hub. Rising demand for sustainable fashion, shifting sourcing preferences from global buyers, and ongoing trade negotiations like FTAs present a golden window. By investing in innovation, upskilling labour, adopting green technologies, and improving ease of doing business, the industry can unlock higher growth. Enhanced collaboration between government and industry stakeholders will further pave the way for a resilient ecosystem.  Today, the industry hangs like a garment on a hanger—balanced between uncertainty and possibility. By identifying and seizing the right opportunities, India can not only stay ahead in the global race but also redefine its role as a leader in the world of apparel. The post Future on the Hanger appeared first on Indian Textile Journal.

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Riding the Tariff Wave US President Donald Trump’s 27 per cent reciprocal tariff on India could give exporters an edge over rivals like China, Vietnam, and Bangladesh. Divya Shetty will explore whether India will seize this opportunity or miss it again. US President Donald Trump has recently announced a revised set of tariff rates impacting a wide range of countries, signalling a renewed focus on reshaping global trade dynamics. While several neighbouring nations like China, Bangladesh, and Vietnam have been hit with significantly higher tariff rates (see Table 1), India finds itself in a comparatively advantageous position—with the lowest tariff rates among them. This unexpected edge could open new doors for Indian exporters, particularly in the textile industry, which stands to benefit from the shifting global sourcing strategies of American buyers seeking cost-effective alternatives. India’s total exports to the US was $77.5 bn in FY24 (around 18 per cent of total exports) of which textile exports would be around $9.6 bn (around 12 per cent of India’s total exports to the US; ~28 per cent of India’s total textile exports). On the imports front, Indian textile industry imported $0.5 bn from the US in FY24 (around 1 per cent of total imports from the US) indicating that India is net exporter to the US in the textile industry. As per the data shared by India Ratings, top five countries exporting textile products to the US in 2024, comprising around 60 per cent of total textile imports in US, were China (34 per cent tariff imposed, increased to 125 per cent and then to 245 per cent at present), Vietnam (46 per cent), India (27 per cent), Bangladesh (37 per cent), Cambodia (49 per cent), Sri Lanka (44 per cent) and Indonesia (32 per cent). Considering lower incremental tariffs on Indian textile exporters, the competitive landscape for Indian textile products shall improve. India stands to gain in the textile export market as the US importers optimise their costs by seeking alternatives to suppliers which are relatively more expensive post the reciprocal tariffs. According to Shradha Saraogi Garg, Associate Director, Corporates, India Ratings & Research, “The reciprocal tariffs imposed by the US are likely to benefit the Indian textile industry, especially the players engaged in export of apparel and home textiles. India exporters may witness increased volumes amid a supply chain re-orientation in the short-term. Larger-integrated textile players already supplying to such US buyers would be at an advantage, compared to the mid and small sized players, to capitalise on the increasing export opportunities.” “This is going to be a strategic opportunity for India because comparatively our competing countries are burdened with more tax percentage. At the same time we have to pass through the challenge in handling quantities and quality to cater to the market with timely delivery.” * Raja Shanmugham, MD, Warsaw International The new tariff landscape The US has imposed a 27 per cent tariff on Indian textile imports, citing retaliatory measures against India’s average 52 per cent tariffs on American goods, Indian textile products enjoyed lower duties, generally under 10 per cent benefiting from trade preferences. The move aligns with the Trump administration’s push for ‘reciprocal trade’ and aims to reduce the $10 billion annual trade deficit with India. In contrast, competing nations like Bangladesh and Vietnam continue to enjoy duty-free or low-tariff access to the US market under preferential trade programs, placing Indian exporters at a distinct disadvantage. “Our industry will need to upgrade our facilities, increase our production capacities, make our units more compliant, and start manufacturing products required by the American market, rather than just continuing to export what we have been doing so far.” * Rahul Mehta, Chief Mentor, CMAI Amongst all the countries, China will face the highest reciprocal tariff from the US and reverse tariff by China on the US. The EU has also decided to retaliate to the reciprocal tariffs of the US. As per Gurudas Aras, Strategic Advisor and Independent Director, “Over the years China has built huge capacities, mainly in high tech manufacturing and is ready to unleash Tsunami of its exports on the world. China is using more factory robots than any other country and those too are locally manufactured. This will bring the manufacturing cost considerably down. This applies to all high-tech electronics, automobiles as well as to the textile manufacturing.” With China’s diminished presence in the US textile market due to elevated tariffs, opportunities have emerged for other textile-producing nations. Countries such as India, Vietnam, Bangladesh, Cambodia, Pakistan, Sri Lanka, Turkey, and several South American nations are poised to capitalise on this shift. Notably, Turkey and many South American countries benefit from relatively low US tariffs, often around 10 per cent, enhancing their competitiveness compared to nations facing higher duties. “With the new US tariffs on Chinese textiles, China may look at diversifying its exports. Japan and South Korea may absorb more due to trade agreements. Bangladesh, Vietnam and India also can be the next big destinations for textiles from China.” * Gurudas Aras, Strategic Advisor and Independent Director With the imposition of steep tariffs by the US on Chinese goods, China is actively seeking alternative markets to redirect its surplus exports. India, given its large consumer base and existing trade ties, emerges as a potential destination for these redirected goods. The Global Trade Research Initiative (GTRI) has highlighted concerns that China may resort to dumping products like electric vehicles, batteries, and other technology items in India to offset its trade losses from the US market. This potential influx poses challenges for Indian manufacturers, who may struggle to compete with the low-priced Chinese imports.  Raja Shanmugham, MD, Warsaw International, opines, “Entry of Chinese goods directly are well governed through tariffs. Still a strict monitoring aspect to be stepped up to control camouflaged entries.” “A lot would depend on the specific tariff structure. If tariffs on raw materials are lowered while duties on finished goods remain high, it may actually reduce Chinese imports. However, if the tariff revisions inadvertently make certain Chinese goods cheaper or more accessible, we might see a short-term spike in imports—especially in categories where Indian production is limited or less cost-effective, especially in synthetic fabrics. India has intensified scrutiny of misdeclared Chinese fabric imports. While revised US tariffs could theoretically divert Chinese exports to India, stricter enforcement of ‘Rules of Origin’ and industry vigilance are likely to limit this trend,” says Dr Siddhartha Rajagopal, Executive Director, TEXPROCIL. “The oversupply may potentially lead to the Chinese prices being significantly lower leading to the domestic landed cost for imported goods still being lower than the domestic prices. This may hurt the margins of domestic upstream players in the near-to medium term.” Shradha Saraogi Garg, Associate Director, Corporates, India Ratings & Research Urvashi Sharma, Consultant, Wazir Advisor, also comments, “The revised tariffs may create a window of opportunity for Chinese textile imports into India. As China adjusts to new tariff dynamics, it is expected to divert its surplus capacities at significantly lower costs to other global markets to compensate for the loss of access to the US. India, with its large consumer base, could become a key target.” Additionally, Bangladesh already enjoys duty-free access for garment exports to India. With reduced competitiveness in the US, Bangladesh may also redirect exports to India, leading to a further rise in imports. Segments potentially exposed to risk As per the data shared by TEXPROCIL, Product categories like synthetic fibres, technical textiles, and high-value fashion garments could be the most vulnerable. India still imports a significant portion of specialty fabrics and high-performance materials, so any tariff hikes on these inputs could affect production costs and competitiveness. Additionally, low-margin segments like basic knitwear or cotton garments may also suffer if tariffs disrupt the supply chain or increase prices. Some of the other most vulnerable product categories may include: * Apparel: Accounts for 35 per cent of India’s US-bound exports, facing a 26 per cent tariff. * Carpets: 58 per cent of India’s carpet exports rely on the US market. * Synthetic fabrics: Vulnerable to under-invoicing and misdeclaration by importers. * Favourable prospects As outlined earlier, this revision is poised to unlock significant opportunities for the industry, with several key areas primed for streamlining, including the following. Competitive edge in value-added products: If the revised tariffs lead to increased costs for synthetic or technical textiles from the affected countries, India stands to benefit by positioning itself as a competitive alternative. This opens the door for Indian exporters to promote their value-added offerings, particularly in segments like organic and sustainable textiles, custom fashion manufacturing, and home furnishings, as well as technical textiles. By focusing on these differentiated, high-demand areas, India can strengthen its presence in the US. market and capture the shifting sourcing preferences of global buyers. Rising interest from global brands: With rising interest from global brands, international retailers and fashion houses are increasingly seeking reliable, politically neutral, and cost-effective sourcing partners. In this landscape, India stands out as a compelling choice due to its vast textile ecosystem that spans the entire value chain—from farm to fashion. The country has built a strong reputation for producing high-quality cotton and home textiles, and its growing emphasis on sustainable and ethical sourcing further enhances its appeal to conscious global buyers. “On account of higher tariffs, the resulting higher input costs could erode India’s price competitiveness if not managed carefully. Bangladesh and Vietnam already enjoy preferential trade access and lower labour costs, making them formidable competitors.” Dr Siddhartha Rajagopal, Executive Director, TEXPROCIL MSMEs can step in: While large exporters stand to benefit from increased volumes, MSMEs have the opportunity to tap into niche markets by focusing on customised, high-margin segments. This presents a chance for them to move up the value chain, embrace digitisation and innovation, and forge direct relationships with boutique or mid-sized US brands, thereby strengthening their position in the global market. Key challenges to be faced The tariff revision presents both an opportunity and a challenge for India. On the positive side, India can position itself as a preferred sourcing hub with lower tariffs compared to competitors, but it must address key structural bottlenecks to fully capitalise on this. “he focus should be on improving cost efficiency, expanding capacity, and building a sustainable supply chain to convert this into a long-term opportunity through cost optimisation, product diversification, and scaling production capabilities..” Urvashi Sharma is a Consultant at Wazir Advisors Increased global competition: Although India has comparatively lower tariff rates among Asian countries, Aras mentions that the “nations like Turkey, Morocco, and those in Latin America could also emerge as strong contenders in this competition, with their tariff rates hovering around 10–15 per cent. Price pressure from rising cost: As tariff rates increase, US importers may be more inclined to share the tax burden with exporters. However, this will largely depend on the strength of the partnership and each party’s negotiation skills. Rahul Mehta, Chief Mentor, CMAI, adds, “This is something that will work on a one-to-one basis, case-to-case basis. Each exporter and their buyer will be negotiating and arriving at their own conclusions. No exporter enjoys the kind of margin where they can absorb an additional 10 per cent duty. So, as of now, that appears improbable. Presumably, they will be negotiating for some kind of relief or adjustment—perhaps sharing the burden on a 50-50 basis or something similar. But there is obviously no formalised, structured agreement. It has to be dealt with on a case-to-case basis.” Managing capacity: While experts view this as a significant opportunity for India to seize, they also caution that the country has missed similar chances in the past—such as the China Plus One strategy and the disruptions in Bangladesh—primarily due to capacity constraints. Saraogi mentions, “The Indian textile industry may not be able to cash on the opportunity immediately, due to the limited capacity to scale up supply immediately and would need to set up facilities and obtain approvals from international buyers which may take some time. On the contrary, any incremental capacity addition decisions based on the revised tariff structure may be unlikely in the near-to medium term as the situation may evolve over the next few months. Any developments on bilateral trade negotiations between the US and India over the next 4-6 months would be a key monitorable. Further, any increase in low-cost dumping of Chinese textile goods in India may also impact the gross margin spreads and shall remain under close watch.” Less favoured destination for MMF: India is a global favourite for cotton, thanks to its large-scale production. However, it has yet to establish itself as a preferred destination for man-made fibres (MMF). This gap could potentially result in fewer orders from the US, with demand shifting toward countries that have stronger MMF production capabilities. Sharma adds, “India holds a strong position in the export of cotton-based products, so these products are less vulnerable to the effects of the revised tariffs as India has established itself as a reliable supplier. However, MMF products could be more vulnerable, as India has limited production capabilities in this segment, and its share in the export of MMF-based products to the US is relatively low. This could result in an increased reliance on imports from countries with more established MMF production, making it a challenging segment for India to capitalise on in the wake of these tariff changes.” How can we leverage the 90-day tariff pause? Although the reduced tariff rates offer significant benefits to the textile industry, the US government has imposed a 90-day pause before their implementation. This window presents a valuable opportunity for the Indian government to engage in negotiations with the US for a more favourable deal. When asked whether the association has any recommendations for the Indian government, Mehta responds, “Our request to the government, essentially during this 90-day period or post the 90 days, is to negotiate the best possible terms with the US government to ensure that the initial advantage we had from the new tariff announcements—where tariffs on India were lower than those levied on Bangladesh, Vietnam, Cambodia, China, etc.—is maintained. This would have placed India in an advantageous position. So, our request to the government is to ensure that this parity is preserved and that we continue to have a lower tariff compared to our competing nations.” During this 90-day pause on reciprocal tariffs with the US, the Indian government has a valuable opportunity to proactively position the country as a more competitive and reliable trade partner. Several strategic actions can be taken to capitalise on this window. Firstly, the government can advocate for sector-specific concessions, particularly in areas where India currently underperforms—such as man-made fibres (MMF). By highlighting the country’s potential for growth and capacity development in this segment, India can make a case for more favourable trade terms and encourage investment into expanding MMF production. In addition, organising India-US textile summits, trade expos, and B2B matchmaking events can serve as powerful platforms to connect Indian MSMEs and exporters directly with US brands and retailers. These events would foster trust, help build long-term relationships, and provide a stage to showcase India’s evolving manufacturing capabilities. Streamlining export-related infrastructure and processes is also critical. The government should prioritise fast-tracking approvals and clearances in key areas such as logistics, warehousing, and port operations to ensure smoother and faster shipment cycles. At the same time, India must upgrade its testing, certification, and compliance mechanisms to align with the rigorous standards demanded by the US market. This will not only boost credibility but also reduce rejections and improve delivery timelines. Moreover, this period offers a chance to strategically promote India’s strengths—for instance, its leadership in sustainable cotton production and its growing competence in technical textiles. A targeted branding campaign in the U.S. could reshape global perceptions and attract attention from buyers seeking ethical and scalable sourcing alternatives. Lastly, it’s crucial for policymakers to actively engage with industry stakeholders—including exporters, manufacturers, and trade bodies—to gather on-ground insights and challenges. These real-time inputs can be used to restructure incentives and fine-tune export policies so they align better with US import patterns and emerging market dynamics. By taking a holistic, action-driven approach during this temporary tariff truce, India can not only boost its textile exports but also solidify its position as a key player in the global value chain. Way forward While the tariffs position India favourably against Asian rivals, success of the country’s export strategy will depend on balancing cost competitiveness, policy agility, and demand-side risks. The strategy may require some key adaptations going forward, like: * Product diversification: Focus on value-added textiles and premium segments to offset price sensitivity. * Market expansion: Explore the EU and ASEAN markets to reduce the U.S. dependency. * Supply chain efficiency: Adopt automation and sustainable practices to lower costs. * Policy advocacy: Push for bilateral agreements (e.g., zero-tariff cotton imports) to solidify advantages. “To avoid any potential impact on our exports, we are already evaluating the export mix and considering moving into value-added segments where India can offer differentiation. Exploring new geographies—like Africa, Latin America, and the Middle East—could also help mitigate dependence on price-sensitive markets. Additionally, we’re looking at vertical integration and local sourcing to reduce exposure to global supply chain disruptions and tariff volatility,” informs Rajagopal. However, this opportunity is not without challenges. India’s limitations in man-made fibre (MMF) production, infrastructural bottlenecks, and capacity constraints could hamper immediate gains. Additionally, the risk of increased dumping by China and intensified competition from low-tariff regions like Turkey and Latin America necessitates strategic vigilance. The 90-day implementation pause provides a crucial window for the Indian government to negotiate better trade terms, accelerate reforms, and promote India as a sustainable, reliable sourcing hub. Targeted support for MSMEs, enhancement of MMF capabilities, and stronger compliance frameworks can further strengthen India’s position. To truly capitalise on this shifting trade dynamic, India must act swiftly and decisively—leveraging policy, investment, and diplomacy to convert temporary advantage into long-term export growth. The post Riding the Tariff Wave appeared first on Indian Textile Journal.

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