Trade Takeoff?

The steep drop in US tariffs — from nearly 50 per cent to about 18 per cent above the global baseline — has restored India’s competitive footing with regional peers. Divya Shetty looks at whether Indian exporters are ready to make the most of this opportunity through better quality and innovation to stay ahead globally.

Shifting tariff regimes and rapidly evolving trade alignments are reshaping the global textile map, placing India at a decisive inflection point in its export journey with the United States. The world’s largest textile import market, valued at nearly $118 billion, has long been a critical destination for Indian exporters, with apparel, knitted garments and home textiles together accounting for nearly 78 per cent of shipments, while carpets contribute another 11 per cent. This heavy concentration of exports underscores both India’s strength in core categories and the urgency to diversify its product basket amid changing trade dynamics.

Recent tariff developments signal both opportunity and caution. The reduction of duties from earlier peaks of nearly 50 per cent to around 18 per cent has significantly improved market access, enhancing India’s competitiveness against key rivals such as Bangladesh and Vietnam. However, the subsequent imposition of an additional 10–15 per cent baseline tariff — following a 2026 ruling by the Supreme Court of the United States — may recalibrate India’s trade advantages, prompting exporters to reassess pricing strategies and supply chain efficiencies.

Industry observers highlight that India’s integrated manufacturing base, spanning cotton, synthetic fibres and value-added apparel production, provides a structural advantage in an increasingly volatile sourcing environment. As global brands seek alternatives to China amid geopolitical uncertainties, India’s end-to-end capabilities and preferential market access could accelerate sourcing shifts and strengthen its global positioning.

Reflecting on the unpredictability of trade relations, Avinash Mayekar, Managing Director, Suvin Expo LLP, remarked, “whether there should be uncertainty in between two nations when they are doing trade or not, that is a question mark in my mind.” His observation captures the broader industry sentiment — one marked by cautious optimism, strategic recalibration and renewed urgency to leverage emerging trade windows.

With 13–16 trade agreements already shaping India’s global engagement and new corridors opening across major markets, the evolving tariff landscape signals a transformative phase for the country’s textile and apparel sector, one that could redefine its competitive trajectory in global commerce.

Export opportunities and market access in the US

Shifting trade equations and evolving global demand are reshaping opportunities for India in the United States market. As competitive pressures intensify, the industry stands at a critical juncture where policy shifts, capacity building and strategic positioning will influence its global standing.

Rajiv Gupta, Joint Managing Director, RSWM, outlines recent volatility in India–US textile trade, particularly the impact of steep tariffs that disrupted competitiveness. He noted that a reduction from nearly 50% to lower levels had restored confidence among global buyers. According to Gupta, “the uncertainty which was prevailing in the industry is temporarily put to a halt, and we have a period of predictability and certainty.” This shift has encouraged renewed sourcing discussions and sampling activity from US buyers.

Gupta emphasised that India performs strongly when operating on a level playing field, particularly in home textiles and cotton garments, where supply chains and production capacities are well established. However, he acknowledged constraints in garment manufacturing capacity compared with Bangladesh, Vietnam, and Sri Lanka. Gupta stressed the need for downstream expansion, noting that “Indian textile industry have to come up with good capacities in downstream areas, and thereby make ourselves more competitive.” He also highlighted man-made fibre (MMF) and future trade agreements with the UK and EU as complementary growth drivers.

Expanding on product-specific opportunities, Suketu Shah, CEO, Vishal Fabrics, highlighted denim exports and garmenting capabilities as critical to India’s positioning. He described the tariff clarity as a turning point, stating, “this is going to be a great moment… inquiries have started,” although restoring full export capacity could take several months. Shah noted that India’s strength in cotton and fabric manufacturing provides a competitive edge, even as garmenting infrastructure remains limited.

Comparing India with Bangladesh and Mexico, Shah explained that Bangladesh’s advantage lies in large-scale garmenting and established trust among US brands, while India remains stronger in raw materials and fabric production. He pointed out structural challenges, including policy limitations and the long gestation period for garmenting investments. “It takes minimum 1,000 days… to come into a real profitability,” he said, explaining why many firms hesitate to invest in large-scale garment manufacturing despite strong export demand.

From the perspective of value-added textiles, Sammir Dattani, Executive Director, Sanathan Textiles, stressed the significant potential in man-made fibres, technical textiles, and performance yarns. He argued that India’s backward integration and innovation at the yarn stage provide competitive advantages, particularly against China in pricing. According to Dattani, “we have a massive opportunity in front of us,” especially in athleisure, functional textiles, and technical fabrics.

He highlighted that technical textiles represent a major opportunity in the US market and can help India transition from commodity supply to solution-driven exports. “It takes us away from just being a commodity supplier to more of a solution provider,” he said, adding that government initiatives and production-linked incentives could accelerate capability building. Dattani also predicted stronger growth in man-made fibres, noting global consumption trends and India’s relatively low per capita fibre usage.

Focusing on branding and retail opportunities, Kapil Pathare, Deputy Managing Director, VIP Clothing, underscored the potential for Indian apparel brands in the US market. He observed that tariff reductions would enhance cost competitiveness in innerwear, basics, and value fashion categories. With the US importing nearly all of its apparel consumption, he noted that even a small shift in sourcing could create billion-dollar opportunities for India.

Pathare argued that India must move beyond contract manufacturing toward brand-led exports and global retail presence. “The opportunity here is not about just OEM exports, but as an Indian brand we should be able to establish a global retail ecosystem,” he said, emphasising compliance, supply chain reliability, and digital market entry. He also identified logistical inefficiencies and fragmented supply chains as cost drivers, calling for more integrated production ecosystems.

India’s competitiveness depends on scaling manufacturing capacity, strengthening supply chain integration, and investing in value-added segments. While tariff reductions and policy initiatives have created a favourable environment, structural challenges—including limited garmenting capacity, logistical costs, and investment barriers—remain significant.

Supply chain diversification and manufacturing shifts

As global textile supply chains undergo structural shifts, India faces a defining moment in strengthening its manufacturing depth and global market positioning. The industry’s future trajectory will depend on how effectively it balances scale, efficiency and evolving consumer expectations in an increasingly competitive landscape.

Gupta emphasise the importance of differentiating between cotton and man-made fibres (MMF). He noted that while India remains the world’s second-largest cotton producer, structural challenges persist due to protected pricing and contamination concerns. According to him, “we have to have our own uniqueness… not depend exclusively on cotton, and come up with blends or more sustainable fibers,” shifting from commodity production to value-added yarn segments.

Gupta further observed that growth potential in MMF remains significant, with capacity expansion in recent years outpacing cotton. He also highlighted improvements in cotton yield through mechanisation, citing Brazil’s rapid progress as an example. However, he stressed that long-term competitiveness depends on moving closer to end consumers. “If we want sustainable growth, we have to be closer to the customer, offering full value,” he said, adding that the real value in textiles lies in garment exports rather than basic yarn or fabric production.

Mayekar raised concerns over India’s cotton productivity, noting that domestic yield remains about half the global average despite the country’s large cultivation area. He pointed to fragmented landholdings and policy coordination challenges between ministries as structural constraints. Mayekar also questioned whether cotton-producing regions could enhance value addition locally, particularly as manufacturing clusters evolve.

Responding to this, Gupta described yield improvement as a policy priority and reiterated that production clusters must ultimately align with customer proximity rather than raw material sourcing. He maintained that value creation requires a shift toward integrated supply chains and global brand engagement.

Turning to denim exports and US market requirements, Shah highlighted the shift from traditional fashion to performance-driven and sustainable textiles. He explained that US buyers increasingly demand comfort, recycled materials, water conservation, and energy-efficient production. “Everybody needs comfort and sustainability… all these parameters have become part of routine operations,” he said, noting that Indian manufacturers have invested in recycling processes and alternative energy sources.

On scale, Shah acknowledged that India trails major producers like China but argued that the country’s strength lies in quality rather than mass production. Pricing pressures and logistics costs remain challenges, though tariff advantages and integrated production could improve competitiveness. He also stressed the importance of proximity to ports to reduce delivery timelines.

From a supply chain perspective, Dattani admitted that India still faces logistical disadvantages due to incomplete value chain integration. However, he observed growing consolidation of textile hubs and increased investment in integrated facilities to reduce turnaround time. He described the establishment of new man-made fiber facilities closer to customers as a step toward eliminating supply chain inefficiencies. According to Dattani, “we need to create quicker response time and reduce logistic costs,” while also targeting technical textiles, athleisure, and performance-oriented garments to offset cost disadvantages through higher value addition.

Pathare examined the impact of US fashion cycles on Indian manufacturing strategies. He explained that the US market operates on rapid replenishment cycles driven by data analytics and demand forecasting. Pathare noted that production models are refreshed every five to eight weeks, requiring flexible manufacturing systems, automation, and reduced lead times. “We will have to build flexible manufacturing lines,” he said, adding that investments in automated cutting and enterprise resource planning systems enable faster production and improved efficiency. He stressed that reducing production timelines—from 120 days to 60 days—would be critical to meeting US market expectations.

Competitiveness, innovation, and value addition

India’s textile sector is entering a decisive phase where innovation, sustainability and value creation will define global competitiveness. As market expectations evolve, manufacturers are being pushed to rethink materials, technology and brand positioning to secure long-term relevance in international trade. The focus is steadily shifting from cost advantage to capability, quality and differentiation.

There is a dier need for India to build strong differentiation through fibre innovation and sustainable manufacturing. Gupta stressed that sustainability, compliance and diversified fibre capabilities would be key enablers for India–US trade. He noted that cotton remains a major strength for India, but expanding into organic, recycled and alternative fibres such as linen, hemp, bamboo and blended yarns could significantly enhance competitiveness.

Gupta argued that India must move up the value chain rather than compete solely on cost with countries such as China. According to him, “our differentiator could be in terms of enabling more fibres,” adding that manufacturers should offer advanced finishes such as water repellence and fire resistance alongside high-quality processing and delivery. He emphasised that buyers seek comprehensive solutions, stating that “it is not only a package of the product, it is a package of complete service which we need to offer.”

Expanding on sustainability in denim manufacturing, Shah described environmentally responsible production as no longer optional. He observed that “sustainable has become a buzzword. You cannot live without that,” noting that manufacturers must adopt organic cotton sourcing, zero-liquid discharge systems and certified chemicals to remain competitive. While technological progress has enabled more efficient processing, Shah clarified that fully waterless denim manufacturing remains difficult due to the chemical properties of indigo dye, explaining that such processes are currently feasible mainly at the garment stage.

The conversation also addressed rising demand for functional and performance textiles. Dattani of emphasised India’s capability to produce speciality yarns and man-made fibre-based textiles for global markets. He noted that modern apparel increasingly incorporates performance attributes such as stretch, moisture management and durability, particularly in activewear and high-street fashion.

Dattani highlighted India’s technical readiness, stating that domestic facilities and expertise are “at par with any international facility.” He also pointed to growing global demand for environmentally friendly technologies such as dope-dyed yarns. Referencing sustainability commitments by global brands such as IKEA and Decathlon, he said such trends present significant opportunities for Indian exporters. However, he acknowledged that price competitiveness with large-scale suppliers like China remains a key challenge, though stronger buyer confidence could help bridge this gap.

From a branding perspective, Pathare highlighted the importance of design, storytelling and consumer perception in the US market. He described the US as a brand-driven environment where product presentation and premium packaging significantly influence purchasing decisions. According to Pathare, Indian companies must shift from a price-led mindset focused on large retailers such as Walmart, Amazon and Costco toward value-led branding strategies.

He stressed the importance of investing in digital marketing and positioning Indian manufacturing as quality-driven rather than cost-focused. Emphasising consumer-centric innovation, Pathare said, “comfort is universal, but what’s important will be the brand perception that will drive your purchases,” adding that Indian brands should aim to deliver products “engineered in India but designed for global consumers.”

Policy impact and long-term industry transformation

While government initiatives have laid a strong foundation, further structural and policy interventions are required to scale growth. Gupta noted that recent government initiatives, including the PM MITRA and Production Linked Incentive (PLI) schemes, have already created a conducive environment for industry expansion. However, he emphasized that the next phase should focus on strengthening capacity-building measures and enabling infrastructure. According to Gupta, greater capital investment initiatives are necessary to fuel growth, alongside labor reforms and liberalization measures to address workforce challenges. He also stressed the importance of export-friendly policies, stating that such measures would help “take organizations or the Indian textiles from this level to the desired level which government has set for all of us.”

There is also a growing importance of compliance with global standards, particularly in sustainability and traceability. Shah observed that international buyers increasingly demand end-to-end transparency across manufacturing processes, including certifications, zero liquid discharge (ZLD) practices, and energy usage parameters. He explained that regular audits ensure compliance with these requirements, demonstrating that Indian manufacturers are capable of meeting global benchmarks. At the policy level, Shah suggested that the government should introduce targeted incentives to scale up garment manufacturing units. He argued that providing special incentives to large mills to expand garmenting operations could help India compete more effectively with countries such as Bangladesh and China, ultimately strengthening export performance.

Dattani highlighted the need for a more integrated textile ecosystem to improve efficiency and speed of supply. He emphasized that government support in building a cohesive manufacturing environment would enable Indian suppliers to respond more effectively to global demand. Dattani also underscored the importance of positioning India as a reliable global brand, noting that price competitiveness has often been a barrier to market entry. He cautioned that the current trade environment offers only a temporary opportunity, stating that “these tariffs are constantly changing and dynamic in nature, so we must try and make the best of the window that we have.” He further suggested that government-facilitated platforms enabling interaction between US buyers and Indian suppliers could accelerate market penetration and strengthen buyer confidence.

The potential for global brand partnerships also emerged as a key theme. Pathare pointed out that a well-structured trade framework could trigger significant capacity expansion across manufacturing segments. He noted that the textile and apparel sector already contributes around 2% to India’s GDP and employs approximately 45 million people directly, and further expansion could create opportunities for global collaborations and co-branding initiatives. Increased manufacturing capacity, he explained, would attract investments and strengthen India’s position as a production hub, paving the way for deeper engagement with international brands.

Although the proposed 15 per cent flat global tariff — down from the prevailing ~18 per cent — offers some relief, industry voices caution that the landscape is still too volatile for confident long-term planning. That said, a uniform tariff structure levels the playing field across competing nations, opening a strategic window for Indian manufacturers to step ahead. By delivering superior quality products and dependable services to developed markets, they now have a sharper opportunity to strengthen their global foothold and capture incremental demand.

India–US Textile Trade Shift

Market exposure

• US textile imports ~$118 Bn
• Apparel + knitwear + home textiles: 78%
• Carpets: 11%
• Export concentration risk

Tariff dynamics

• Past duties ~50%
• Reduced to ~18%
• Additional 10–15% baseline tariff

Quotes of people:

1. Most of our buyers, who were earlier struggling to decide where to source and did not consider India a viable option due to the 50% tariff, are now open to discussions. Sampling and other related processes have already begun.
2. Rajiv Gupta, Joint Managing Director, RSWM

• We have fewer garmenting facilities compared to Bangladesh, but this is evolving, with many factories now coming up with higher garmenting capabilities.
• Suketu Shah, CEO, Vishal Fabrics

• We have a massive opportunity in value-added textiles, particularly in athleisure clothing and performance yarns, mainly in man-made polyester filament-based garments and textiles.
• Sammir Dattani, Executive Director, Sanathan Textiles

• The opportunity is not limited to OEM exports; as Indian brands, we should aim to establish a global retail ecosystem. This will require strong compliance with global sizing and packaging standards.
• Kapil Pathare, Deputy Managing Director, VIP Clothing

• If we consider China, the biggest player, its current tariff disadvantage gives us an advantage, and we can certainly capture market share from it.
• Avinash Mayekar, Managing Director, Suvin