The U.S. government’s decision to impose a 27% reciprocal tariff on Indian exports is expected to benefit India’s textile and apparel industry, as it becomes a more attractive sourcing destination for American buyers.
The move comes as Washington enforces significantly higher tariffs on competitor nations like China, Vietnam, Bangladesh, Cambodia, and Pakistan, reshaping global trade dynamics in the sector.
U.S. Tariffs Reshape Global Textile Market
Under the new tariff structure, China faces over 50% tariffs, Vietnam 46%, and Bangladesh 37%, making their textile exports to the U.S. far more expensive. As a result, India, with its relatively lower tariff burden, stands to gain as an alternative supplier.
Trade experts believe the shift will encourage U.S. brands and retailers to increase sourcing from India, diversifying their supply chains and reducing reliance on China and Southeast Asian nations.
India’s Competitive Advantage
India has long been a global player in textiles, offering a robust supply chain, competitive labor costs, and government incentives. With a well-established cotton and synthetic textile industry, India is positioned to fill the gap left by its higher-tariffed competitors.
Additionally, the Indian government’s Production Linked Incentive (PLI) scheme for textiles is expected to drive further investment, boosting exports to the U.S. market.
Challenges and Trade Talks
Despite the opportunity for growth, industry leaders caution that the 27% tariff still presents challenges for exporters. Increased costs may affect smaller manufacturers, and logistical hurdles such as port inefficiencies and high freight charges need to be addressed to maximize the benefits.
In response to the tariff changes, India has signaled that it will not retaliate against U.S. trade policies. Instead, the government is engaging in trade negotiations with Washington to seek better terms for Indian exporters. India has also announced tariff reductions on U.S. imports, including motorcycles and whiskey, as part of ongoing discussions.