US tariff cut to boost India textile exports, double-digit growth seen

With the US agreeing to cut tariffs on Indian goods to 18%, industry expects India's textile and apparel exports to gain a competitive edge and post double-digit monthly growth from FY27

With the United States agreeing to slash tariffs on Indian goods to 18 per cent from 50 per cent, this may well give an added advantage to India’s textile and apparel sector versus competitors Vietnam, China, Bangladesh, Pakistan and Indonesia. Key free trade agreements and rising US sourcing from India could lead to monthly double-digit growth in exports in 2026–27, according to industry sources.

 

The US development comes at a time when the Budget on Sunday lined up several measures to boost the expected demand uptick in the sector.

 

“We agreed to a trade deal between the United States and India, whereby the United States will charge a reduced reciprocal tariff, lowering it from 25 per cent to 18 per cent,” US President Donald Trump said in a social media post following a call with Indian Prime Minister Narendra Modi.

   

“Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement,” Modi responded on X.

 

“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 billion to $1.6 billion from the current $1.27 billion,” said Prabhu Dhamodharan, convenor, Indian Texpreneurs Federation (ITF).

 

At nearly $11 billion, India’s exports of textile and apparel items to the US accounted for close to 28 per cent of the country’s total exports of these products in the financial year 2024–25. “This is a huge positive for the Indian textile and clothing industry. From the country having the highest tariff, we are now having the advantage of being the lowest,” said Sanjay Kumar Jain, managing director of Delhi-based TT Ltd and chairman of the ICC National Textiles Committee.

 

Due to the increased tariff in the US market, the knitwear hub Tiruppur has already witnessed a loss of ₹15,000 crore in 2025 because of the higher duties.

 

This comes days after the India–European Union deal, which is likely to be a game-changer for the Indian textile and apparel market, as it will open zero-duty access to the $95 billion European market for Indian manufacturers, in which India’s share is barely 6 per cent, or $5.5 billion. Industry experts expect this to double to over $11 billion in the next five years.

 

The deal may 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. In the same month, India also concluded free trade agreement negotiations with New Zealand. In July 2025, India signed the Comprehensive Economic and Trade Agreement (CETA) with the United Kingdom.

 

“We thank the government of India for its continuous engagement with the US and appreciate US buyers for their sustained support. 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.