US Tariff: India’s Textile Test
India’s textile and apparel (T&A) industry, one of the country’s largest employment generators, has faced a severe blow with the United States doubling tariffs on Indian exports from 25 per cent to 50 per cent, effective from August 27, 2025. With nearly 28 per cent of India’s T&A exports destined for the US, the new duties could disrupt a sector that contributes almost 2 per cent to the nation’s GDP and supports over 100 million direct and indirect jobs.
Export hubs such as Tiruppur, Noida, Gurugram, Bengaluru, Ludhiana, and Jaipur are rushing to dispatch consignments before the deadline to escape the new tariffs. In Tiruppur alone, shipments worth nearly ₹20 billion each month are being expedited, with exporters racing to get goods cleared before the cut-off. However, uncertainty looms over shipments landing in the US after September 17, which will be subject to the steep duty.
The potential impact is staggering. In FY 2024–25, India’s textile and apparel exports to the US touched $10.8 billion, of which $5.3 billion came from apparel alone. With tariffs now set to rise to an effective rate of 63.9 per cent, exports worth as much as $11 billion annually are at risk, raising fears of widespread factory closures. Industry players estimate that apparel shipments worth $3–3.5 billion are immediately under threat. At 50 per cent, US buyers have virtually halted new orders, making India’s products uncompetitive compared with rivals.
Industry leaders have urged for urgent government support through cash-based export incentives, stressing that temporary subsidies are essential to counter new tariffs and prevent major export disruptions. Large companies, having production facilities outside India, are realigning their supply chain and production processes to minimise tariff impact.
On the policy front, New Delhi has moved quickly. The government has launched its first countermeasure by focusing on boosting textile exports through outreach programmes in 40 key markets, including the UK, Japan, South Korea, Germany, France, and Australia. While India exports to over 220 countries, these 40 markets are critical as they collectively import over $590 billion worth of textiles and apparel annually, against which India’s market share is only 5–6 per cent.
The government has also scrapped the 11 per cent duty on cotton to make Indian products more competitive and is preparing an Export Promotion Mission worth ₹25 billion to help offset tariff impacts. Export Promotion Councils (EPCs) have been asked to lead the diversification drive by mapping markets, identifying high-demand products, and linking clusters such as Surat, Panipat, Tirupur, and Bhadohi to global opportunities.
Despite near-term challenges, industry leaders see the crisis as a potential turning point for India’s export strategy. They believe extreme tariffs are unsustainable and that India’s strong domestic market, large workforce—four times that of the US—and growing global relevance could drive a manufacturing renaissance if supported by bold policies. The moment is viewed as critical for protecting jobs, strengthening industry, and reinforcing India’s role in global trade.
