India’s textile and apparel sector, a cornerstone of its export economy, is grappling with new challenges following the U.S. imposition of a 50% tariff on Indian textile shipments. The move has sent ripples across key production hubs like Tiruppur, Noida, and Ludhiana, threatening the competitiveness of Indian exporters in one of their largest markets.

Tariff Shock and Industry Response

The new tariff has hit India’s sixth-largest global textile and apparel export industry, valued at $34.4 billion in FY24, with nearly half of these shipments headed to the U.S. and EU. Exporters are reporting order slowdowns and increased pressure from buyers to share costs, straining margins—particularly for small and medium-sized enterprises (SMEs).

Yet, some businesses remain cautiously optimistic. Vasant Marimuthu, CEO of Teestra Lifestyle, continues to ship samples to the U.S., stating that his customers are willing to absorb part of the additional cost to keep supply chains intact.

Government and Legal Dimensions

Commerce Minister Piyush Goyal has affirmed that India will not bow to U.S. pressure, and instead will look to diversify exports into alternative markets. Meanwhile, a U.S. federal appeals court ruling questioning the legality of tariffs imposed under emergency powers has raised hopes that the 50% tariff may face challenges in the future.

Industry Challenges

The tariff comes at a time when exporters are already navigating rising input costs and weak global demand. SMEs, which form the backbone of the industry, are particularly vulnerable, with many struggling to maintain profitability. Calls for a U.S.-India free trade agreement (FTA) have resurfaced, highlighting the political dynamics behind the trade dispute.

India’s Global Role in Textiles

Despite these challenges, India remains a major player in the global textile and apparel industry. With an annual production capacity of 22,000 million garments and a workforce employing millions across its value chain, the sector is integral to India’s manufacturing and export ecosystem.

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Key Data Snapshot

Aspect	Details
Tariff Impact	50% tariff imposed by the U.S. on Indian textile exports
Key Regions Affected	Tiruppur, Noida, Ludhiana
Global Ranking	India is the 6th largest textile and apparel exporter
Export Value (FY24)	$34.4 billion
Major Markets	Nearly half of exports go to the U.S. and EU
Annual Production	22,000 million pieces of garments
Employment	Millions across the textile value chain
Business Response	Some firms (e.g., Teestra Lifestyle) continue exports, with buyers absorbing costs
Government Stance	India will not yield to U.S. pressure; seeks alternative markets
Legal Context	U.S. appeals court ruled many emergency-based tariffs unlawful
Industry Challenges	Reduced orders, higher costs, SME strain
Political Dynamics	Renewed calls for a U.S.-India Free Trade Agreement (FTA)

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Conclusion

India’s textile and apparel exports are at a crossroads. While the 50% U.S. tariff poses immediate hurdles, the sector’s resilience, scale, and global significance suggest it can weather the storm—provided businesses diversify markets and policymakers secure fairer trade terms. The outcome will not only shape India’s textile future but also influence broader U.S.-India trade relations in the years to come.