From tariffs to turning points in the textile trade

Tariffs can close doors, but they can also push us to open new ones, asserts Kanishk Maheshwari.

Not so long ago, India and the United States looked poised to reshape the global trade map with a bold vision of reaching $500 billion in bilateral trade by 2030. There was talk of aligning supply chains, transferring technology, and deepening a strategic partnership. The optimism was high, and India was to be America’s next big bet. Today, however, that partnership is being tested sharply.

From Tiruppur’s cotton corridors to Surat’s synthetic yarn hubs, the US accounted for nearly 40 per cent of India’s total textile exports, a relationship worth billions each year. With tariffs now jumping from 9 per cent to a punishing 50 per cent, the US has turned into a premium zone where Indian products are among the costliest.

In 2023–24, India exported around $16 billion worth of textiles and apparel to the US, led by ready-made garments, home textiles, and certain man-made fibre fabrics. Ready-made garments alone, like shirts, t-shirts, trousers, made up over 70 per cent of apparel exports. With the new duty, these products are instantly 15–30 per cent more expensive than those from Bangladesh, Vietnam, or Cambodia, which enjoy trade agreements or GSP advantages. Bangladesh’s $10 billion apparel exports to the US now have a clear edge, while Vietnam’s $18 billion share becomes even harder to displace.

For a buyer in New York, the math is simple: the same shirt from Dhaka or Ho Chi Minh lands with a double-digit cost advantage over Surat. Industry sources suggest large US retailers like Amazon, Walmart, and Target has already asked sourcing teams to halt or review Indian orders. The impact is visible — exporters in Tamil Nadu’s Tiruppur, Noida’s garment belt, and Surat’s fabric units report slowed inquiries, delayed payments, and even cancellations.

The hit is sharpest in mass-market apparel, where competition is ruthless and substitution easy. Home textiles, with niche positioning, have some cushion. Technical textiles — medical fabrics, automotive upholstery, and industrial applications — remain under-penetrated but promising. If the tariff holds, the sector could see a $5–7 billion drop in export value in the next year.

Yet this is not the end of the road. Tariffs are both walls, as well as mirrors — they may block the way but they also reflect back the weaknesses in our strategy. The 50 per cent duty exposes India’s over-reliance on one large market, a narrow product focus, and a race-to-the-bottom cost competition. The question now is not just how to fight the tariff diplomatically, but how to adapt.

Adaptation in any export industry comes down to mainly two things: price superiority and technical superiority.

On price, targeted policy support can help. The RoDTEP (Remission of Duties and Taxes on Exported Products) scheme refunds embedded domestic taxes, but many high-impact textile categories are insufficiently covered or excluded. Including vulnerable HS codes could recover part of the tariff loss. A freight support mechanism, especially for MSME exporters, could claw back more points by offsetting India’s high logistics costs.

Liquidity is the other immediate priority. Working capital cycles are long, payment delays are common, and higher tariffs may push buyers to demand steeper discounts or longer credit terms. Expanding interest subvention, enabling invoice discounting platforms, and extending credit guarantees to smaller exporters could keep supply chains moving despite tighter margins.

The longer-term pivot is to sophistication over substitution. Competing with Bangladesh or Vietnam on cost is a losing race. Building in-house design teams, investing in R&D for technical textiles, and embedding Six Sigma-level quality control can change the game entirely. Technical textiles make up just 15 per cent of India’s textile output, compared to over 50 per cent in advanced economies, but they open access to high-value, less price-sensitive markets.

The EU, for example, is importing more performance fabrics, medical textiles, and sustainable blends which are areas where India has capacity but needs scale, branding, and market penetration. Beyond Europe, Australia, Africa, and the Middle East hold potential in home and institutional textiles. Individually these markets may not match US volumes, but collectively they can reduce dependence on any single buyer. Product diversification into geotextiles, filter fabrics, and composites can also tap demand less vulnerable to tariff shocks.

Some of this will take years. New markets need relationship-building, new products require R&D investment, and buyer perception shifts with consistent delivery. But if the 50 per cent tariff has made one thing clear, it’s that trade relationships are never permanent. Buyers will go where the value makes sense; our job is to ensure India remains that place.

The government’s planned Rs 200 billion Export Promotion Mission could be pivotal if designed right. Beyond disbursal, it should function as a think-and-do tank — offering technology support, market intelligence, skill mapping, and branding assistance. Used well, it could fuel both short-term survival and long-term transformation.

For too long, India’s textile story has been about scale and cost. The next chapter must be about skill, creativity, and resilience. Tariffs can close doors, but they can also push us to open new ones. If we make the shift now, this 50 per cent duty might be remembered not as a blow, but as the moment India’s textile industry stopped competing just to survive — and started building to lead.

About the author:

Kanishk Maheshwari, Co-Founder & MD, Primus Partners, has over 15 years of work experience in the areas of industrial promotion, ease of doing business, MSME development, investment realisation, process re-engineering, Developing strategic quality frameworks, and Policy Advocacy in leading large-scale, multi-sectoral government engagements across India. He has also worked with multilateral organisations such as DFID, The World Bank, to various economic and development related projects in India.