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Apparel exporters on Friday raised an alarm over steep 25 per cent US tariffs, stating that they will have to sell below cost to keep their factories running and avoid mass layoffs. This comes as new tariffs are set to come into effect on August 7, and as US tariffs on India have been set higher than on over 50 countries, including Bangladesh and Pakistan.
“We request immediate government intervention to offset this huge setback. Exporters have their back against the wall and will have to sell below cost to keep their factories running and avoid mass layoffs,” Sudhir Sekhri, Chairman, Apparel Export Promotion Council (AEPC), said in a statement.
The US is a key market for Indian Ready-Made Garments (RMG) exports, with India holding a 33 per cent share in the country’s total garment exports in 2024, AEPC said. India’s presence in the US garment import market has grown, with its share increasing from 4.5 per cent in 2020 to 5.8 per cent in 2024, and it ranks fourth among the top RMG exporters to the United States, it said.
“Top three most exported products by India to US: Cotton T-shirts (9.71 per cent); women’s or girls’ dresses of cotton (6.52 per cent); babies’ garments of cotton (5.46 per cent), etc. The top three exports of India to the USA hold 10, 36, and 20 per cent share, respectively, in the US total imports of these products globally,” AEPC said.
China continues to be the top exporter, with a market share of 21.9 per cent in 2024, down from 27.4 per cent in 2020. Together, China, Vietnam and Bangladesh supplied 49 per cent of US apparel imports in 2024. Notably, while tariffs on China continue to be 30 per cent, US tariffs on Vietnam and Bangladesh have been set at 20 per cent.
The US is India’s largest export market for the labour-intensive Indian textile and apparel industry, as India exported $10.91 billion worth of products under the category in FY25. A steep 25 per cent tariff would leave Indian products uncompetitive compared to those from Bangladesh.
Textiles have been a key growth driver in the US market, as a Morgan Stanley analysis said that India’s bilateral goods trade surplus with the US has doubled over the last 10 years, growing from $20 billion in FY15 to $40 billion in FY25. “This increase has been mainly driven by higher surpluses in sectors like electronics, pharmaceutical products and textiles,” the report said.
The India-US trade deal is stuck over sensitive sectors such as agriculture and automobiles. The Indian Express had reported last week that India is unlikely to agree to US demands during the ongoing trade negotiations to accept genetically modified (GM) agricultural products such as corn and soya.
This assumes significance as agriculture remains one of the contentious issues between the two countries, and the United States Trade Representative (USTR) has previously flagged restrictions on its GM products by countries as discriminatory.
