The 27% tariff hurts now. But it’s not the end. India’s textile industry can adapt. It has the skills and scale to compete.
NEW DELHI (India CSR): The United States is a key player in the global textile and apparel market. It imports and exports large volumes of textiles. In 2024, U.S. textile and apparel imports reached $107 billion. This was a 2.6% increase from 2023. However, the first half of 2024 saw a 3.58% decline. Imports totaled $49.3 billion during this period. Inflation and supply chain issues caused this drop. India relies heavily on the U.S. market for its textile exports. These include cotton yarn, home textiles, garments, and technical textiles. The U.S. accounts for 15–18% of India’s textile exports. Now, U.S. tariffs on Indian textiles are rising. This could have major short- and long-term effects.
Before Trump’s trade policies, Indian textiles enjoyed benefits. They faced low tariffs under the Generalized System of Preferences (GSP). Most Favored Nation (MFN) rates ranged from 5% to 12%. This depended on the product type. After 2018, Trump’s “America First” policy changed things. India lost GSP status. Duty-free benefits ended for nearly 2,000 products. This included key textile categories (HSN Chapters 50–63). Tariffs on Indian exports increased. By 2025, tariffs hit 26–27%. This is a huge jump from pre-Trump rates. It’s two to five times higher than before. India still competes with China, Vietnam, and Bangladesh. But the tariff hike raises costs and challenges.
The tariffs could hurt Indian textile exports in several ways. Export volumes may drop. Higher tariffs make Indian goods less competitive. Exporters might absorb some costs to keep prices low. This would cut profit margins. Or they could pass costs to U.S. buyers. This might lower demand. The 26% tariff gives rivals an edge. Countries like Vietnam and Bangladesh face lower or no tariffs. U.S. importers might switch suppliers. They could favor nations with better trade deals. Small and medium-sized Indian firms will feel the strain. Many are in Tamil Nadu, Gujarat, and Punjab. Financial stress could lead to job losses. Some plants might even shut down.
India can respond strategically to these challenges. One option is diversifying export markets. Relying less on the U.S. could help. New markets with high demand could replace U.S. sales. Another idea is improving product value. Better quality and innovation could offset tariffs. High-quality goods at lower margins might still attract buyers. India could also push for policy changes. Working with trade bodies and the government is key. They could negotiate to lower or remove tariffs. This would level the field with competitors. Boosting domestic demand is another tactic. Focusing on local sales could reduce export risks. This could strengthen Indian firms at home.
Despite the challenges, India has advantages. It’s better positioned than some Asian rivals. Smart moves could turn this into a win. Innovating supply chains is one step. Cutting costs through efficiency could help. Negotiating better deals with buyers is another. Exploring new markets could spread the risk. The 27% tariff hurts now. But it’s not the end. India’s textile industry can adapt. It has the skills and scale to compete. With the right strategies, it could thrive.
(India CSR)
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