US 50% Tariff Shock: What It Means for India’s Textile Exports

The Trump administration has been tough on India when it comes to trade, imposing high tariffs on key Indian exports like textiles, steel, and agriculture to protect US industries, raising costs for Indian exporters. 

The US recently raised tariffs on Indian textiles and apparel to a steep 50%, effective August 27, 2025, in response to India’s ongoing oil imports from Russia amid rising geopolitical tensions. This marks one of the most significant trade actions against India in recent years.

This tariff shock hits a key pillar of India’s export economy, the textile and apparel sector. With the US as its biggest market, higher costs could slow exports, risk jobs, and weaken India’s global competitiveness

Let’s break down what’s happening, why it matters, and what it could mean for the Indian economy and industry.

1. What Triggered the Tariff Hike?

The US move is largely seen as a reaction to India’s ongoing oil trade with Russia. While the Trump administration calls it “reciprocal,” the steep rates and sharp timing make it feel more like a pressure tactic tied to shifting global power dynamics.

India’s Position in Global Textile Trade

India, among the world’s largest economies and top textile exporters, relies on this sector as a key pillar of its export strength. The textile and apparel industry makes up about 8.2% of the nation’s total merchandise exports in FY 2023–24. Globally, India holds a 3.9% share in the total trade of textiles and apparel.

While Indian textile exports are diversified across multiple international markets, the United States remains one of its most important markets. In 2024, India’s textile and apparel exports to the US were worth around $2.44 billion (₹20,740 crore), according to the US International Trade Commission.

India–US: A High-Stakes Textile Trade Relationship

The US is especially important for India’s ready-made garment (RMG) exports, and the dependence goes both ways. In 2024, India accounted for around 33% of America’s total ready made garment imports, making it one of the top suppliers to the US clothing market.

From April to October 2024, India exported nearly $8.7 billion (₹73,950 crore) worth of ready-made garments (RMG) and $7 billion (₹59,500 crore) in cotton textiles. These numbers highlight the scale of the industry and how much it depends on steady, reliable trade ties with major partners like the US.

2. Timeline: How the US Tariffs on Indian Textiles Escalated

3. India’s Textile Exports to the US: What’s at Risk?

Market Dependence

Roughly 28–33% of India’s total textile and apparel exports are US-bound. Any disruption here impacts manufacturing, employment, and forex inflows.

India exported $10.3 billion (₹87,550 crore) worth of textiles and apparel to the US in FY25. Industry estimates suggest the new 50% tariff could decline volumes by 40–50%, resulting in a direct revenue hit of $2.5–3 billion (₹21,250 crore to ₹25,500 crore).

Major Categories Affected

Indian exports of knitted and woven garments, made-ups (home textiles), and carpets are the primary categories impacted. These sectors account for a major chunk of India's textile exports.

By taxing these key items, the US isn’t just targeting a few goods; it’s going after the core of India’s textile earnings, which could be a much harder blow to the economy.

Category-Specific Tariff Rates:

Knitted garments face the steepest Effective tariff at 63.9%(including baseline, country-specific, and penalty surcharge), making them the most expensive category of Indian textiles in the US market.

Across categories, US tariffs are well above 50%, making Indian goods far more expensive in the American market, hence reducing their price advantage and competitive edge.

4. The US Tariff Rates: India vs Others on Key Textile Exporters

India faces the highest tariffs, almost twice those of competing countries, putting it at a clear competitive disadvantage.
This huge tariff gap gives lower-duty exporters like Bangladesh, Vietnam, and Turkey a strong edge and an opportunity to grab market share, increasing the risk of US buyers switching suppliers unless India bears part of the tariff hit by offering competitive prices or tap into other markets to reduce US dependence.

5. Leading Indian Textile Exporters React to the 50% US Tariff Shock

• Vardhman Textiles Limited is a top textile producer that exports a wide range of products like yarn, fabrics, and garments. In February 2025, it made up about 12.45% of India’s textile exports.
• Welspun India is the top home textiles exporter in the country, with products like bed linen, towels, and rugs. The US is its biggest market, making up about 65% of its revenue in mid-2025. Welspun holds an 18% share of the US bedsheet market and is India’s leading towel exporter to America.
• Arvind Fashions Pvt Ltd is a major exporter of denim, finished garments, yarn, and fabric, accounting for about 11.31% of India’s textile and apparel exports as of February 2025.
• Nitin Spinners Limited is a leading exporter of cotton and blended yarns, as well as knitted and woven fabrics, offering a wide range of products from everyday garments to high-end fashion textiles. In February 2025, it made up 13.16% of India’s textile exports. 
• Pearl Global is a key exporter of readymade garments, including infant, kids, ladies wear, denim, and casual apparel, mainly serving developed markets like the US and Europe. In FY25, around 64% of its sales came from the US market.

Stock Market Fallout

Amid the tariff imposition and trade restrictions, Indian textile companies with significant exports to the US market have seen notable declines in their share prices. For instance, Vardhman Textiles Limited’s shares fell about 18% in the last month, Nitin Spinners Limited dropped 16.7%, and Pearl Global declined by 12.6%. Similarly, Arvind Fashions Pvt Ltd and Welspun India experienced share price falls of 6.7% and 5.5%, respectively. This market reaction reflects investor concerns over the impact of the steep US tariffs on the sector’s future prospects.

6. Industry Associations Speak Out

Confederation of Indian Textile Industry (CITI) :

Called the tariff a "huge setback" that will significantly hurt India's textile and apparel exporters. Chairman Rakesh Mehra said this steep hike will sharply erode India’s competitiveness in the US market. He urged the government to swiftly implement measures to support exporters, such as ensuring raw materials at competitive prices and fast-tracking bilateral trade agreements with the US to reduce losses.

Apparel Export Promotion Council (AEPC):

AEPC Chairman Sudhir Sekhri called the tariff hike to 50% a “major blow” to the labour-intensive textile and apparel sector, warning that MSMEs dependent on the US market cannot absorb such steep duties and risk order cancellations and layoffs without government intervention. AEPC has urged urgent support, including export incentives and credit assistance.

Both bodies warn of long-term damage if the issue isn’t resolved swiftly.

7. Strategic Way Forward for India: Possibility of Resolution

The government may engage diplomatically to ease tensions and might roll out measures such as export-linked incentives, cheaper credit for textile MSMEs, and fast-tracking bilateral trade agreements or take the issue to the WTO for resolution to soften the blow and to protect India’s export competitiveness

Conclusion

India’s textile exporters are facing a storm, a sudden trade barrier in their biggest market, tougher global competition, and no immediate policy support. If the situation doesn’t improve soon, it could bring real pressure for factories, jobs, and investor confidence. 

The next few months will be crucial in showing whether this is a short-term setback or the beginning of a long-term shift in India’s textile story.

(Note: All USD to INR conversions use an exchange rate of 1 USD = 85 INR )

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