The United States has imposed a 25 per cent tariff on Indian textile and apparel exports from August 7, 2025. This rate is higher than that applied to over 50 other countries, including Bangladesh and Vietnam. Indian exporters have raised concerns and urged the government to intervene. The tariff hike poses challenge amid ongoing trade negotiations and global market competition.
US Tariff Policy and Its Impact on India
The US tariff on Indian apparel is set at 25 per cent, exceeding rates for competitors such as Bangladesh (20 per cent), Vietnam (20 per cent), Indonesia (19 per cent), and Cambodia (19 per cent). This creates a severe duty disadvantage for Indian exporters. Industry bodies like the Apparel Export Promotion Council (AEPC) and the Confederation of Indian Textile Industry (CITI) have brought into light risks of selling below cost and potential factory closures. The tariff increase threatens jobs and factory sustainability in India’s textile sector.
India’s Market Position in US Apparel Imports
Despite tariff challenges, India’s share in the US garment import market has grown from 4.5 per cent in 2020 to 5.8 per cent in 2024. India ranks fourth among top exporters to the US, with key products including cotton T-shirts, women’s cotton dresses, and babies’ cotton garments. The US accounts for 33 per cent of India’s total ready-made garment exports in 2024. However, China remains the largest exporter, although its share has declined from 27.4 per cent in 2020 to 21.9 per cent in 2024.
Government Initiatives to Boost Textile Exports
The Ministry of Textiles reported a 5 per cent growth in exports from the textile and handicraft sectors in FY25, reaching $37.7 billion. To enhance competitiveness, the government launched the Scheme for Integrated Textile Park (SITP) and approved PM Mega Integrated Textile Region and Apparel (PM-MITRA) parks in seven states. These parks aim to provide world-class infrastructure and improve production efficiency. The total investment for PM-MITRA parks is Rs 4,445 crore, planned over seven years until 2027-28.
Trade Negotiations and Agricultural Issues
India-US trade talks remain stalled over sensitive sectors such as agriculture and automobiles. The US demands acceptance of genetically modified (GM) crops like corn and soya, which India is unlikely to agree to. Agricultural trade barriers have been a long-standing issue between the two countries. The United States Trade Representative (USTR) has criticised India’s restrictions on GM products as discriminatory. The resolution of these disputes is crucial for broader trade agreement progress.
Challenges for Indian Exporters
Indian exporters face multiple challenges – higher tariffs, competition from countries with lower duties, and stalled trade talks. The tariff increase could force exporters to reduce prices below cost, risking factory operations and employment. Industry leaders urge swift government action to provide relief and ensure raw material availability. Maintaining growth and market share in the US remains a priority despite these obstacles.
Questions for UPSC:
- Critically analyse the impact of tariff barriers on developing countries’ export sectors with suitable examples.
- Explain the role of government infrastructure schemes like PM-MITRA in enhancing India’s textile industry competitiveness.
- What are the challenges faced by India in negotiating trade agreements with the United States? How do agricultural issues affect these negotiations?
- Comment on the significance of the US market for Indian apparel exports and the strategies India can adopt to sustain growth amid global competition.
