The United States (US) agreeing to slash tariffs on Indian goods to 18 per cent may give the textile and apparel sector a competitive edge over rivals such as Vietnam, China, Bangladesh, Pakistan, and Indonesia. Key free-trade agreements (FTAs) and rising US sourcing from India could lead to monthly double-digit growth in exports in 2026-27, according to industry sources.
The US tariff decision comes a day after the Union Budget has lined up several measures to support the expected demand uptick in the sector.
“From FY27, the sector can see month-on-month double-digit growth in apparel and home textile exports, lifting the monthly apparel export run rate to $1.5-1.6 billion, from the current $1.27 billion,” said Prabhu Dhamodharan, convenor, Indian Texpreneurs Federation.
At nearly $11 billion, India’s exports of textile and apparel products to the US accounted for close to 28 per cent of the country’s total exports in this category during FY25. “This is a huge positive for the Indian textile and clothing industry. From the country having the highest tariff, we are now having an advantage of being the lowest,” said Sanjay Kumar Jain, managing director of Delhi-based TT, and chairman of ICC National Textiles Committee.
Due to the increased tariff in the US market, the knitwear hub of Tiruppur has already witnessed a loss of ₹15,000 crore in 2025.
This follows closely on the heels of the EU deal, which is expected to be a game-changer for India’s textile and apparel industry. The agreement will provide zero-duty access to the $95 billion European market, where India’s share stands at just 6 per cent, or $5.5 billion. Industry experts expect this to double to over $11 billion within the next five years.
“This deal will also ensure that factories can run at full steam once more and job creation can get back to previous levels,” said Ashwin Chandran, Confederation of Indian Textile Industry.
He added that the deal could also play a crucial role in India's ambitious target of achieving $100 billion worth of exports in the textile and apparel sector by 2030, from $37.7 billion in FY25.
In December 2025, India signed the Comprehensive Economic Partnership Agreement (CEPA) with Oman. During the same month, it concluded free trade agreement negotiations with New Zealand. Earlier, in July 2025, India signed the Comprehensive Economic and Trade Agreement (CETA) with the United Kingdom.
Dhamodharan thanked the government for continuous engagement with the US. “We also commend Indian exporters for their resilience — adopting survival-export strategies, offering discounted prices, and protecting India’s export market share during a challenging phase. Going forward, the focus must remain on building competitiveness to ensure sustained double-digit export growth over the next decade," said Dhamodharan.
 "US deal, FTAs likely to stitch a new growth story for textiles sector")
