The Indian textile industry is facing the harsh reality of the tariffs announced by US President Donald Trump. Industry organisations are concerned about the immediate shock of the proposed tariffs. Importers may demand steep discounts to offset the sharp rise in landing costs, potentially disrupting new orders and affecting final trade pricing. Additionally, a possible decline in US consumer demand, coupled with zero-tariff benefits offered to several competing countries, could diminish the opportunities initially anticipated amid the ongoing tariff war.

The Confederation of Indian Textile Industry (CITI) said in a release, “US tariff on India is comparatively lower. The reciprocal tariff of 26 per cent on Indian products, based on factor of equalisation, remains comparatively lower than tariffs of other competitors like China (34%), Bangladesh (37%) and Vietnam (46%).”

“While, it seems favourable to India, it will be important to see how this cost increase is adjusted. In the past, a large part of such cost escalation had to be borne by the suppliers. With such a steep increase, the entire cost cannot not be passed on to the consumers and hence the importers will look for more cost competitive sourcing. Countries with better logistic and supply chain efficiencies will have a better capacity to retain relative cost competitiveness,” commented the industry organisation.

During 2024, India exported textile and apparel products worth $ 10.5 billion to the US accounting to about 28.5 per cent of India’s total T&A exports to the world and about 13 per cent in India’s total merchandise exports to US. Trade analysis shows that during the last 5 years, India has been a relatively preferred partner for the country for its sourcing of T&A products as compared to other competing countries like China, Vietnam and Bangladesh.

With ongoing tariff restructuring, it is crucial for the Indian industry to closely monitor the responses of competing nations. Some competitors of the textile value chain are likely to announce a zero-tariff policy for exports to the US. This evolving trade landscape would reinforce the need for India to engage proactively with US authorities to negotiate a more favourable tariff regime.

The biggest concern for now is possible decline in US demand for goods including textiles and lack of clarity on fine print. It will be important to see how India can position itself among its competitors. However, at present the tariff announced by US presents an opportunity for India compared to its competitors in terms of better market access.

Given the uncertainty surrounding tariff structures, Indian exporters also need to explore alternative global markets to sustain and enhance trade volumes. Strategic engagement with the US remains critical, but a parallel focus on expanding into new destinations and enhancing the country’s trade facilitation measures will ensure resilience.

Dr. A Sakthivel Honorary Chairman, Tiruppur Exporters’ Association (TEA) told Fibre2Fashion, “With 35 per cent of India’s apparel exports headed to the US, the additional ad valorem tariff of 26 per cent significantly raises costs, making Indian products less competitive. Türkiye and Brazil, key competitors of India will have to face a lower 10 per cent tariff, making them a more attractive sourcing option for US buyers. This could lead to a shift in trade flows, further impacting India’s export share. India’s major competitors in the European Union, such as Italy, Germany, and Spain, face a 20 per cent tariff, which is lower than India. This will also negatively impact India’s apparel exports. However, those countries are majorly importing from India only, which is an advantage for India. However, key competitors like Sri Lanka (44%), Vietnam (46%), Cambodia (49%), Bangladesh (37%) and China (34%) will face significantly higher tariffs. Comparatively, India with a lower 26 per cent tariff, becomes more attractive to US buyers.”

The tariffs imposed by the US are country-specific ad valorem duties on imports from trading partners, effective from April 9, 2025. Goods already in transit before this date will be exempt. These duties will apply to all imports under existing US trade agreements, unless otherwise specified. India will face a 26 per cent country-specific ad valorem duty. “The new duties are in addition to any existing duties, fees, taxes, or charges on imported goods, unless stated otherwise. For example, with T-shirts, the current tariff rate is 16.5 per cent, and with the new tariff, it would increase to 42.5 per cent. However, for our competing countries, the tariff remains higher than ours,” said Sakthivel.

Hemant Jain, President, PhD Chamber of Commerce and Industry, commented on social media platform X, “India’s robust industrial growth and self-reliance will dodge the impact of US tariffs. With a mere and insignificant short-term effect on GDP, there is no colossal effect to be worried about. Factors like high domestic demand, PLI schemes and ease of doing business will continue to drive the economy on the progressive path, making India a global manufacturing hub.”

Fibre2Fashion News Desk (KUL)