Indian textile industry in uncertainty, still sees edge over rivals

Indian exporters call US tariff hike a blow to textile ambitions but say strong supply chain and lower duty rates than rivals will help retain market presence

After the tariff announcement on Wednesday by American President Donald Trump, the textile industry in India called the 25 per cent rate a setback to its export ambitions, while expressing hope for a solution to the issue soon.

 

However, India will still have an advantage of 10 per cent over Bangladesh and Cambodia, 5 per cent over Sri Lanka, and 20-25 per cent over China, the country’s major competitors in the American market.

 

Trump’s not specifying the “penalty” amount, which is in addition to the tariff, also added to the sector’s concern. The United States (US) is India’s largest market for textile and apparel exports. During January-May 2025, US imports of textile and apparel from India were valued at $4.59 billion, a rise of more than 13 per cent over the same period last year, when the figure stood at $4.05 billion. This rise was driven primarily by the drop in imports to the US from China and Bangladesh. The US has imposed a 35 per cent tariff on exports from Bangladesh while the rates for Indonesia, Vietnam, and Cambodia have been set at 19 per cent, 20 per cent, and 36 per cent, respectively.

 

“The tariff rate is going to test the resolve and resilience of India’s textile and apparel exporters because we will not enjoy a significant duty differential advantage vis-à-vis many other countries, except Bangladesh, with whom we compete for a larger share of the US market. The lack of clarity on the penalty amount adds to the uncertainty for businesses because planning becomes difficult,” said Rakesh Mehra, chairman of the Confederation of Indian Textile Industry (CITI).

 

Prabhu Dhamodharan, convener, Indian Texpreneurs Federation (ITF), said: “We believe ongoing negotiations may still alter the tariff structure. The shift from an expected 10 per cent to 25 per cent tariff is a setback, but India’s strong domestic ecosystem of raw materials and intermediates gives global buyers a compelling reason to prefer India.”

 

“With scale and competitiveness improving, we must stay focused on sustaining the China Plus One momentum,” he added.

 

Mehra said CITI would look forward to the government working out a mechanism to aid exporters. “What is at stake are not just export earnings but also employment generation in India, the world’s most populous nation,” he added. India has set itself a target of achieving textile exports worth $100 billion by 2030.

 

“In the interim, we will have to deal with this tough situation by raising the competitiveness of the Indian textile and apparel domain,” Mehra added.