India’s textile industry is bracing for potential losses following the United States’ imposition of a 50% tariff on Indian goods, effective from August 27, which threatens to dent the competitiveness of Indian exporters in the American market. However, a report by Care Edge Ratings suggests that growth in exports to the United Kingdom, under the India-UK Free Trade Agreement (FTA), and ongoing FTA negotiations with the European Union could partially offset the impact.
The report noted that while some export orders may shift to competing countries such as Vietnam, Bangladesh, Pakistan, and China, a sharp decline in shipments to the US is unlikely in the current year (CY25). Many US buyers had already advanced shipments ahead of the tariff deadline. A more pronounced impact is expected in CY26, when the tariffs take full effect.
India’s textile and apparel exports, valued at USD 35 billion in CY24, remain heavily dependent on the US market, which accounts for roughly 28–29% of total shipments. The India-UK FTA is expected to provide a significant boost, particularly to the ready-made garments (RMG) and home textiles segments, helping Indian exporters compete on a level playing field in the UK’s USD 23 billion textile import market.
Ongoing trade talks with the EU are also anticipated to support India’s textile exports in the coming years. The country’s textile and apparel industry is estimated at USD 160–170 billion, with the domestic market contributing 78–80% of this value. Of the USD 35 billion exported in CY24, RMG and home textiles accounted for about 63%, with the United States remaining the largest destination at nearly USD 10.5 billion.
Care Edge concluded that while the US tariff hike poses short-term challenges, strategic trade agreements with the UK and EU could help mitigate the impact and sustain long-term growth for India’s textile sector.
