US Tariffs Shift: India's Textile Edge Fades?

The Indian textile industry's advantageous position for US exports has significantly shifted after a recent US Supreme Court order. Previously holding an edge over competitors such as Bangladesh and Vietnam, the industry now finds itself on a level playing field with China regarding competitiveness.

This change means the advantage India previously enjoyed over China appears to have diminished in recent days. Industry experts note that while India has deep supply chains and skills, scaling up and creating strong brands are crucial for global markets. China is also viewed not just as a competitor but potentially as a complementary market.

Aniket Dani, Director at Crisil Intelligence, points out that at a 15% tariff, India matches China's competitiveness. However, the impact is limited because India's exports are predominantly cotton-based, while China's are more diversified, including a substantial share of MMF-based apparel. Therefore, the benefit to India is primarily confined to cotton-based apparel.

Furthermore, China is actively diversifying its apparel exports to markets outside the US. Evidence of this includes a decrease in China's share of US apparel imports from 19% in Q1 2025 to 12% in Q4 2025. This strategic shift by China could potentially mitigate its direct competition for Indian exporters in the US market.

Sudhir Sekhri of the Apparel Export Promotion Council (AEPC) expressed optimism, stating India is now on "a firm wicket." Previously, shipments faced duties around 25%, but the new 15% tariff applies universally. Indian suppliers now have a clear advantage over other Asian exporters, with effective duties for India ranging from 6-17% after adjustments, and potential additional benefits of 3-4% under the revised structure.

Despite these shifts, overall Ready-made Garment (RMG) exports rose by 2.4% to $12 billion from April to December 2025. However, exports to the US saw a 3% decline to $3.6 billion during the same period. January 2025 RMG exports also decreased by 3.8% compared to the previous year. Strong export growth was observed in markets like Japan (30%), Saudi Arabia (18.5%), and Italy (16%).