India’s textile and apparel exporters have suffered a major blow after the United States raised tariffs on Indian imports to 50%, as it wiped out any limited competitive edge they had over key rival Bangladesh, which faces a lower 20% duty.
Apparel exporters will now find themselves disadvantaged against other key competitors like Vietnam, and Sri Lanka too. The US accounts for about $10 billion of India’s annual textile and garments exports of $37 billion.
“This is a huge setback to the labour-intensive apparel export industry. There is no way the industry can absorb this,” Sudhir Sekhri, Chairman of the Apparel Export Promotion Council (AEPC), told FE.
Massive Job Losses Loom in the Labor-Intensive Sector
Sekhri had earlier warned that even a 25% tariff would severely dent India’s export competitiveness, forcing manufacturers to sell below cost and triggering mass layoffs. Textile industry is the country’s second-largest employment generator after the agriculture sector, with over 45 million direct jobs. Industry sources on condition of anonymity said lay-offs would be inevitable if the hefty US tariff persists.
China, which accounts for about a fifth of US apparel imports, is subject to a 30% interim extra US tariff, and US officials have warned of an additional 34% hike if ongoing trade negotiations between Washington and Beijing fail to reach a resolution by August 12.
“The US tariff announcement is a huge setback for India’s textile and apparel exporters as it has further complicated the challenging situation we were already grappling with and will significantly weaken our ability to compete effectively vis-à-vis many other countries for a larger share of the US market,” Confederation of Indian Industry chairman Rakesh Mehra said.
The new US rate for Bangladesh is 20%. The latest US tariff rate for Indonesia and Cambodia are 19% each. The tariff rate for Vietnam is 20%. Currently, China is the biggest exporter of textiles and apparel items to the US, followed by Vietnam, India, and Bangladesh
In 2024, the US imported $107.72 billion worth of textiles, including $80 billion in apparel. China held the largest share at 21%, followed by Vietnam (19%), Bangladesh (9%), India (6%), and Sri Lanka (3%). The US is a key market for Indian ready-made garments (RMG), accounting for 33% of total garment exports in 2024. India’s share of US RMG imports rose from 4.5% in 2020 to 6% in 2024, making it the fourth-largest exporter to the US, behind China, Vietnam, and Bangladesh—countries that together supplied 49% of US apparel imports in 2024.
Exporters Call for Government Intervention and Support
Indian exporters were earlier hoping to gain market share in the US after Trump’s initial tariff announcement during his ‘Liberation Day’ address in April. At that point, India’s key competitors—Vietnam (46%), Bangladesh (37%), and Sri Lanka (44%)—were facing significantly higher tariffs. However, following intense negotiations and major US buying commitments across sectors, these countries managed to get their tariffs reduced to 20%.
“I am sure the government also realises that this unreasonable increase in tariff will sound the death knell for the Micro and Medium apparel industry, especially those who majorly sell to the US market, unless the GoI steps in with direct fiscal support to the industry,” Sekhri said.