India’s $37-billion textile and apparel exports industry is seeing little to no benefit from the rupee’s fall to a record low, as the steep 50% US tariffs have more than offset any currency-led gains.
According to exporters, the tariff shock has already hit their export volumes and squeezed wafer-thin margins, leaving the sector with almost no relief from the latest depreciation.
The rupee on Wednesday plunged to a historic low of 90.14 against the US dollar, breaching the ₹90 mark amid sustained capital outflows driven by continued FPI sell-offs, strong importer demand, and uncertainty over the US-India trade deal.
What did industry reps say?
“A weaker rupee normally helps exports, but in the current tariff-driven situation the benefit is very limited,” Prabhu D, convenor of the Coimbatore-based Indian Texpreneurs Federation (ITF), told FE. The 500-member federation represents the entire textile value chain, from standalone spinning and weaving units to apparel and home textile exporters.
According to him, exporters to the US are trying to sustain volumes by offering heavy discounts to retain buyers, with many operating at cost levels or even absorbing losses as they wait for the trade deal to conclude in December.
“The bigger challenge is China’s improved tariff position with the US, which has given American buyers greater comfort to source from them,” he adds.
On October 30, the United States reduced tariffs on Chinese goods to 47% from 57%, effectively leaving India among the more heavily taxed countries. The US imposed a 50% duty on Indian imports — comprising a 25% reciprocal tariff and an additional 25% penalty linked to India’s purchases of Russian oil.
Impact of the tariff burden on Indian exports
The higher tariff burden has already begun to affect India’s $37-billion textile and apparel exports industry, where the US is the single-largest market with a 28% share. India’s textile and apparel exports fell 13% year-on-year to $2.67 billion in October, as per data from the Confederation of Indian Textile Industry (CITI). During April–October, textile exports declined 3.54% year-on-year, while apparel exports grew 1.13%.
However, Vishal Pacheriwal, MD of Parnika India, a Surat-based women’s wear manufacturer and exporter, says the rupee’s depreciation can offer some marginal gain by improving price competitiveness in dollar-denominated markets. “This can give firms flexibility: they may either pass on savings to buyers (to protect volume), or keep prices stable and enjoy improved margins,” Pacheriwal said, adding that many companies have already been offering discounts to American buyers to retain orders.
Some textile processing units also point out that a weaker rupee raises the cost of imported raw materials. “The cushioning effect (of currency depreciation) is limited when exporters rely on imported inputs, as those costs also rise in rupee terms. Moreover, many competing economies have also seen their currencies weaken, narrowing the relative advantage India might gain,” said Suketu Shah, CEO, Vishal Fabrics, which specialises in dyeing, printing and processing of denim, cotton and other fabrics.
Shah notes that the benefit of rupee depreciation is most visible only for exporters with limited import dependence, as their input costs are less affected by currency swings. “It’s important to note that the benefits remain nuanced like import-linked costs for fabrics, dyes, packaging, and logistics have also risen,” he points out.
For now, the industry’s “real hope”, according to Prabhu, is an early resolution of the trade issue — ideally a removal of the additional 25% tariff in December — to help India retain its market share in the US.