India must safeguard its export-oriented industries and emerge stronger

The Union government must put forward a coherent policy framework to safeguard India's export sectors, with particular attention to textiles

As the 50 per cent tariff imposed by the Trump administration in the United States took effect on August 27, 2025, a sense of uncertainty took over India’s export-driven industries. Tamil Nadu is one of India’s leading states in manufacturing and software sectors, and the US has long been its largest export market. In the last financial year, 31 per cent of Tamil Nadu’s merchandise exports were destined for the US, compared with 20 per cent for India as a whole. That deep reliance means any shift in American trade policy hits Tamil Nadu harder than most.

 

This hike by the US government is unprecedented, and the fear among exporters across sectors is palpable. The steep duty increases are already leading to cancellations of orders. The hikes have made our products uncompetitive globally. 

In this difficult context, the response of the Union government has been inadequate. While the Government of Tamil Nadu is stepping up to do all that is within its powers, there are clear limits to what a state government can achieve. We urge the Union to get its act together and put forward a coherent policy framework to safeguard India’s export sectors, with particular attention to textiles.

 

An analysis by Guidance Tamil Nadu estimates that the state’s projected loss under a 50 per cent tariff could be as high as $3.93 billion across sectors. The worst-hit sectors are textiles, machinery, gems and jewellery, and auto components, which together account for the majority of the projected loss. Across these sectors, the projected job losses range from 13 per cent to a massive 36 per cent.

 

Contributing 28 per cent to India’s textile exports — the highest in the country — Tamil Nadu’s textiles sector sustains millions of families. In Tiruppur district, where 65 per cent of textile workers are women, the industry is a socio-economic ecosystem that has dramatically improved the lives of the people over decades. Tiruppur alone earned foreign exchange of about ₹40,000 crore last year. Beyond exports, the sector fuels ancillary industries such as dyeing, logistics, packaging and machinery manufacturing, creating a multiplier effect across India.

 

The impact of US tariffs on the textiles sector is the most worrying. Our estimates project that at 50 per cent duty, the potential loss in the sector could be around $1.62 billion, and hundreds and thousands of jobs are at immediate risk.

 

On August 16, I wrote to the Prime Minister seeking urgent support, including a special relief package with a moratorium on principal repayment, correction of the inverted duty structure by bringing the man-made fibre chain under 5 per cent goods and services tax (GST), and collateral-free loans up to 30 per cent under the Emergency Credit Line Guarantee Scheme (ECLGS) with interest subvention and a two-year moratorium. We also proposed enhancing the Remission of Duties and Taxes on Exported Products (RoDTEP) to 5 per cent and extending export credit to all textiles, including yarn. These steps are essential, and without affordable capital, many textile units will not survive.

 

We also urged fast-tracked free trade agreements (FTAs) and bilateral deals to offset tariffs and open new markets. Alongside the US, India must use its diplomatic channels and deepen ties with the European Union, the United Kingdom and Africa, where our strengths in labour, scale and compliance can secure low or zero-duty access. I will soon be leaving for a trade promotion visit to Europe with this goal in mind.

 

I appreciate the Union government’s decision to suspend the 11 per cent Customs duty on cotton imports until December 31, following my letter to the Prime Minister. The temporary suspension aims to stabilise domestic cotton prices and signals our willingness to address US concerns. Yet cotton supply is only one piece of the puzzle. Unless tariffs are rolled back or offset through other incentives, the relief will be short-lived.

 

However, in Tamil Nadu, we have not waited idly for external support. Our government has recently announced a capital investment subsidy for setting up new textile processing units (dyeing, printing and finishing) with zero liquid discharge-based effluent treatment plants (ETPs), as well as for the expansion, modernisation and upgradation of existing textile processing units with ETPs. This scheme encourages small and medium processors to adopt sustainable practices, reduce pollution and meet international compliance norms. The dyeing and processing segment is often the weakest link in the supply chain, and by investing here, we empower our exporters to meet strict environmental standards demanded by overseas buyers. The sector has publicly appreciated the state government for this support.

 

The state has pioneered several initiatives to strengthen the textile value chain. In 2023, we launched a Special Scheme for Technical Textiles and promoted man-made fibre manufacturing. Following this, the Tamil Nadu Technical Textile Mission was launched in 2025 to support industries to enter the field of technical textiles. Technical textiles, used in industries from healthcare to infrastructure, represent a sunrise opportunity.

 

The state has improved housing facilities for migrant workers, strengthened skill training through partnerships with industry, and expanded social security coverage. We must remember that our competitive edge lies not in cheap labour but in skilled and motivated people who can deliver quality at scale.

 

However, there is only so much a state government can do. The Union government’s initiatives and support are indispensable in areas such as international negotiations, Customs policy and macroeconomic support. Tamil Nadu stands ready to work with the Union to safeguard our exports and protect our workforce from unemployment. By acting together, we can turn a moment of adversity into an opportunity for transformation, and I hope that the Union will be proactive and collaborative in these efforts.

I believe that the imminent crisis is not just about tariff lines and trade deals. It is about the future we want for our people. Do we choose to retreat and let other imports replace our products, or do we innovate, upgrade and push for fair trade? Do we let transient geopolitical tensions undo decades of work, or do we use this crisis to accelerate reforms that make the industry stronger and more competitive?

 

The resilience of our industry gives me hope. Be it GST blues, the pandemic’s collapse of demand, slumps in demand, or volatility in prices, each time the industry has adapted and bounced back. Yet, resilience should not be mistaken for invulnerability. Given the scale of those impacted, the Union must act with urgency and frame policies that deliver timely relief to the affected sectors. With unity, clarity of purpose and timely action, India must immediately safeguard our exporters and emerge stronger.     The author is the Chief Minister of Tamil Nadu.