Textile industry fears new Trump tariff to hit India hard

US President Donald Trump’s decision to slap an additional 25% tax on goods imported from India presents a stiff challenge for the country’s textile sector, the Confederation of Indian Textile Industry (CITI) has said.

Noting that US President Donald Trump has announced a 25% tariff on India plus a “penalty” amount that has not been specified, effective August 1, CITI said the US is India’s largest market for textile and apparel exports.

During January-May 2025, U.S. imports of textiles and apparel from India were valued at $4.59 billion, a rise of more than 13% compared to the same period last year, when the figure stood at $4.05 billion.

The U.S. has already imposed a 35% tariff on exports from competing nations like Bangladesh and has fixed US tariff rates for Indonesia, Vietnam, and Cambodia at 19%, 20%, and 36%, respectively.

“Without a doubt, the new tariff rate is going to seriously test the resolve and resilience of India’s textile and apparel exporters, as we will not enjoy a significant duty differential advantage vis-à-vis many other countries, except Bangladesh, with whom we compete for a larger share of the US market. The lack of clarity on the penalty amount further adds to the uncertainty for businesses as planning becomes difficult,” Rakesh Mehra, chairman of CITI, said.

However, CITI remains hopeful that the tariff issue will get resolved once the proposed bilateral trade agreement (BTA) between India and the United States is in place.

“CITI anticipates the tariff issue to get resolved following the BTA between India and the US. In the interim, we will have to deal with this tough situation in the best manner possible by doing all we can to raise the competitiveness of the Indian textile and apparel domain,” Mehra said.

The organisation wants the government to work out a mechanism to aid exporters to counter the adverse impact of the US tariffs on India’s textile and apparel arena. “After all, what is at stake is not just export earnings but also employment generation in India, the world’s most populous nation,” Mehra pointed out. India has set itself a target of achieving textile exports worth $100 billion by 2030.

According to Mehra, CITI is already working closely with the government and industry members to raise the business competitiveness of local textile and apparel companies so that these enterprises can become more future-ready organisations. “India’s textile sector is dotted with MSMEs. We are trying to make them more focused on quality, innovation, and sustainability,” Mehra added.