Dr Gurudas Aras: The India-US deal includes strategic fine print to incentivise high-value shifts

India–US trade agreement, global textile supply chains, Dr Gurudas Aras, Bangladesh, Vietnam, US textile import market, US Supreme Court, apparel manufacturing, GSP, Generalised System of Preferences

The India–US trade agreement is poised to reshape global textile supply chains, opening new opportunities for India to emerge as a preferred sourcing destination. In this interview, Dr Gurudas Aras, Strategic Advisor and Independent Director, examines India’s competitive edge, growth potential, and evolving compliance challenges.

How could the India–US trade agreement reshape global textile supply chains, and to what extent can India position itself as a preferred sourcing hub compared to competitors like Bangladesh and Vietnam?

The India–US trade agreement can be a game-changer for the Indian textile industry. Lowering of tariffs on Indian exports to the US from punitive levels (up to 50 per cent) to around 18 per cent opens up the $118 billion US textile import market to Indian exporters, giving them a significant competitive edge. The deal reduces volatility for fashion retailers, who previously faced unpredictable tariff hikes on imports from India. However, the later change to a 10 per cent & then 15 per cent baseline following a 2026 US Supreme Court ruling might require a recalibration of the advantages to India.

India’s strong domestic base in cotton, synthetic fibres, and apparel manufacturing allows it to offer end-to-end solutions, unlike Bangladesh, which is more dependent on imported raw materials. Indian textiles now enjoy preferential access, making them cost-competitive with Bangladesh and Vietnam, which rely heavily on GSP (Generalised System of Preferences) or bilateral deals but don’t have the same broad tariff reductions. The US brands, weary of overdependence on China and facing geopolitical risks, may shift sourcing to India to balance supply chains.

Bangladesh remains attractive for ultra-low-cost garment production, but less competitive in higher-value textiles. Vietnam remains strong due to its diversified trade agreements (including CPTPP and RCEP), but India’s deal with the US narrows the gap. The tariff cuts give India a pricing advantage that can offset its relatively higher labour costs compared to Bangladesh.

 In short, this agreement positions India as a preferred sourcing hub for US buyers, potentially reshaping global textile supply chains by reducing reliance on China and challenging Bangladesh and Vietnam’s dominance.

Will the trade deal primarily drive export volumes in traditional segments (yarn, fabrics, garments), or could it accelerate India’s shift toward high-value textiles such as technical textiles, MMF-based products, and sustainable materials? What structural changes would be required to achieve this transition?

The deal’s most immediate impact is the revival of volume in labour-intensive traditional categories. There will be a segment rebound of hubs like Tirupur (knitwear) and Surat (MMF). I expect that these hubs will double exports over the next 5 years as large US retailers (e.g., Walmart, GAP) resume sourcing.

The ready-Made garments still account for 45 per cent of India’s textile export basket, while cotton-based products comprise roughly 70 per cent of domestic production. While volume will continue to be driven by basics, the deal includes strategic “fine print” to incentivise high-value shifts. The agreement is viewed as a catalyst for the $21 billion Indian technical textile market, targeting specialised niches like Meditech and Geotech. The Indian manufacturers are moving towards MMF and blended fabrics segments that now dominate 65 per cent of global consumption. There will be a shift toward recycled polyester and organic cotton to meet tightening US and EU compliance standards. 

What challenges and opportunities could emerge from stricter US standards on sustainability, labour compliance, and traceability, and how prepared is India’s textile ecosystem—especially MSMEs—to meet these evolving requirements?

Stricter US standards driven by theUFLPA and evolving ESG mandates present a “compliance-or-perish” scenario for India’s textile industry. While these norms threaten traditional low-cost models, they offer a pathway to becoming a premium, high-value global partner.

The biggest challenge would be the cost of compliance.

• Traceability burden: The UFLPA shifts the “burden of proof” to importers, requiring “clear and convincing evidence” that no part of a product (even a single fibre) is linked to forced labour.
• Operational strains: Fragmented supply chains, where nearly 60 per cent of fabric comes from decentralised power looms, make farm-to-fashion tracing nearly impossible for most firms.
• Cost inflation: Adopting green technologies and certifications can increase production costs by 15–20 per cent, putting Indian MSMEs at a disadvantage against competitors who may face lower duties. 

MSMEs, comprising 80 per cent of the value chain, are open to sustainability but face severe hurdles in technology and capital. Only 21 per cent of companies currently disclose Scope 3 (value chain) emissions

 The biggest Opportunity would be the “Indispensable Plus One”

• Market share gains: Strict enforcement against Chinese cotton (which accounts for 20 per cent of global production) creates a massive vacuum for Indian manufacturers to fill, provided they can prove “clean” supply chains.
• Premium positioning: Alignment with US and EU sustainability norms (like the European Green Deal) allows Indian exporters to move from being “cost-focused producers” to “high-value strategic cornerstones”.
• Incentivised innovation: The shift is driving a rise in regenerative organic farming and textile recycling, segments where India is already positioning itself as a leader. 

The government’s support of halving investment thresholds for the PLI Scheme to include mid-sized firms, setting up 7 PM MITRA Mega Textile Parks to provide an integrated, traceable infrastructure and launching a Green Technology Scheme to subsidise the transition to clean energy for MSMEs will help target the gaps for the MSME sector.

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Woolmark Bolsters India–Japan Wool Ties in Tokyo

The Woolmark Company has deepened India–Japan trade engagement with the launch of Wool Connect, a targeted B2B matchmaking platform aimed at strengthening global wool supply chains. Designed to connect Woolmark-certified Indian manufacturers with international buyers, the initiative seeks to fast-track sourcing conversations while reinforcing the value proposition of high-quality Australian merino wool in premium markets.

The inaugural Wool Connect programme took place in Tokyo in collaboration with the Wool and Woollen Export Promotion Council (WWEPC), on the sidelines of the India Trend Fair. The event drew senior stakeholders from the Indian and Japanese textile and apparel industries and was attended by Nagma M. Mallick, Ambassador of India to Japan, highlighting its role in advancing bilateral trade cooperation.

Held in a structured one-on-one, speed-meeting format, Wool Connect brought together 10 Woolmark manufacturing partners from India—covering capabilities from yarn to finished garments—with 10 leading Japanese trading houses and brands. The format enabled close to 100 focused business meetings in a single day, streamlining dialogue and accelerating pathways to commercial collaboration.

Indian participants included Jayashree Textiles, Raymond, Linear Design, KCS, Shakti Knitting and Bansal Spinning Mills, among others. Japanese counterparts featured MN Inter, Takisada Nagoya, Pheeta, Moririn, Itochu and Toyoshima. The curated matchmaking ensured alignment on quality standards, technical capabilities and sourcing needs.

“Wool Connect reflects Woolmark’s role as a catalyst within the global wool ecosystem,” said Ajay Pradhan, Country Manager, The Woolmark Company. “By bringing quality merino wool manufacturers from India and Japanese buyers together in a highly focused environment, we are enabling meaningful commercial dialogue while reinforcing the value of Australian merino wool across international supply chains.”

“Wool Connect is a truly unique initiative by Woolmark, in partnership with WWEPC, thoughtfully curated to connect India’s woollen manufacturers with the sophisticated Japanese market and promote exports from India,” said R.C. Khanna, Chairman, WWEPC. “Launched at India Fashion & Lifestyle Show, held from 28–30 January, 2026 in Tokyo, Japan, this platform reflects our shared commitment to innovation, sustainability and positioning Indian woollen products as a premium global offering.”

Industry participants also underscored the platform’s effectiveness. “Wool Connect was a great platform to connect with Japanese buyers and trades in one place and have focused business conversations,” said Daljit Bal, Sales Head—Jayashree Textiles.

“Raymond being the largest wool fabric manufacturer in India and one of the oldest certified partners to Woolmark, it made great sense to be in Wool Connect. Japan market for wool has good potential in the premium and made-to-measure categories,” said Devdatt M Chobey, Dy. GM, International Business, Raymond Lifestyle.

“We had well-structured one-on-one meetings with Japanese buyers to understand their requirements and issues. Woolmark embodies the core of anyone working with wool, highlighting its significant value,” said Chintan Bansal, Owner, Bansal Spinning Mills.

Through Wool Connect, The Woolmark Company reinforces its position as the global authority on wool, leveraging its international network to bridge supply and demand while fostering long-term, trust-based trade relationships in high-value markets.