India: Textile and apparel exporters suggest reduction in tariff with the U.S.

Reduction in tariff will not affect Indian exporters, says Apparel Export Promotion Council secretary general Mithileshwar Thakur; tariff levied by U.S. on textiles and apparel ranges from 2% to 32%, AEPC says

The Apparel Export Promotion Councilsaid the US accounts for approximately 35 % of Indian apparel exports. In 2024, Indian apparel exports to the US were worth $ 5.2 billion, which is 11.2% more than the exports in 2023.

The move to impose reciprocal tariff by the new US administration can adversely impact India's apparel trade. However, this threat can be converted into an opportunity. The industry welcomes the Central government's move to go for Bilateral Trade Agreement (BTA) with the US that will not only mitigate the potential risk of the proposed reciprocal tariffs' adversely impacting the apparel trade to the US but also create possibilities for enhancing apparel exports to the US. Hence, the AEPC has suggested to the Centre to consider bringing down the applicable customs duty rates on major apparel products vis-à-vis the US to match with the applicable custom duty rates on same products in the US. And, since apparel imports into India from the US is negligible, the Centre should also consider offering "Zero for zero" for all apparel products, said Mithileshwar Thakur, secretary general of the AEPC.

According to the Confederation of Indian Textile Industry (CITI), the U.S. is the single largest export destination for Indian textile and apparel sector, contributing to 28.5% of the total T&A exports between January and November last year.

For the U.S., China remains the dominant supplier with a 25.6% share and India is the third largest supplier with 10.8% share. However, while the U.S. imports from China declined at a CAGR of 9.4% over the last five years, imports from India have grown at a CAGR of 9.1% during the same period. In 2024, the U.S. T&A imports from India stood at about $10.8 billion, whereas exports by the U.S. to India were worth $0.41 billion.

India primarily imports fibre products from the U.S., with cotton making up 50.6 % of total U.S. T&A exports to India. India's exports to the U.S. are dominated by apparel and home textiles, accounting for 81.5% of total shipments.

India should explore a zero-for-zero trade agreement with the U.S. for T&A products with necessary safeguards for sensitive products. This will create a level playing field for Indian exporters against Vietnam, which benefits from duty concessions. With reduced tariffs, India's T&A exports to the U.S. could surge to $16 billion within the next three years, the CITI said.

According to the Cotton Textiles Export Promotion Council (Texprocil), the tariffs can be reduced to equal the U.S. tariff for T&A. "The trade balance is in India's favour. Indian textiles can gain a lot from reduction or zero-for-zero agreement. India is also exploring free trade agreement with the U.S. So we need to wait and see," said Siddhartha Rajagopal, Texprocil's Executive Director.