Trump's new tariffs may open doors for India's textiles, but tough rivals remain in play

Time of India

4 days ago

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The latest round of tariff announcements by US President Donald Trump has introduced fresh uncertainty into global textile trade, with Indian exporters remaining cautious despite an apparent edge over Bangladesh, which has been hit with a 35% duty, ToI reported.Exporters are closely watching New Delhi's trade negotiations with Washington, as Trump claimed that the deal with Vietnam allows him to impose a 20% tariff, even though there may be concessions for specific product categories. The final outcome remains unclear as countries, including Bangladesh, are scrambling to rebalance the situation through talks with the US government."We need to watch how tariffs move. Buyers are a little confused at the moment," V Elangovan, managing director of Tirupur-based SNQS International, told ToI. He said the market is further complicated by competition from China. "Retailers have to fill their shelves. Last week, our merchandisers were in Shanghai, we could not compete because the Chinese were quoting better prices this year than last year. It is not clear how they can do so when the tariff for them is higher. We need more hand-holding from govt," he said.While Indian products remain competitive in garments and home textiles, exporters and government officials have been pushing for zero duty access, but even if a trade deal is concluded, it appears unlikely that the Trump administration will roll back the baseline 10% tariff applied to all countries. Indian exporters currently face this 10% duty, which gives them an advantage over Bangladesh and Vietnam, but only if competing countries are not provided new subsidies.In categories like natural garments, where India has a traditional advantage, the cost disadvantage is relatively small, at 3–4%. However, for synthetic garments , Indian manufacturers face a larger cost gap of around 10–11%, mainly due to higher production costs, according to the Apparel Export Promotion Council (AEPC)."India, even with the existing reciprocal tariff rate (26% announced in April), will gain in export competitiveness vis-a-vis major garment exporting competing countries. Besides, we are quite hopeful of India striking a favourable trade deal which will further improve the competitiveness of India's apparel exports in all important US market... even a moderate reduction in the reciprocal tariff to around 15% could significantly improve our competitiveness across both natural and synthetic garment categories, thereby opening infinite export possibilities for India amid shifting global sourcing trends," said AEPC CEO Mithileshwar Thakur.At the current tariff rates—India at 26%, Vietnam at 20%, and Bangladesh at 35%—India is competitive against Bangladesh in the natural garments category but faces price pressure in synthetics. "It is looking good for us and a trade deal will help," said K M Subramani, president of Tirupur Exporters' Association.However, the question remains whether Indian garment manufacturers are in a position to scale up production, particularly as many continue to hold back on investing in capacity expansion.Shares of Indian textile firms, including Gokaldas Exports Vardhman Textiles , and Arvind Ltd , rose as much as 8.2% in intraday trading on Tuesday, July 8, following the US administration's announcement of the new 35% tariff on Bangladeshi apparel and textile exports. The increase was seen as a reaction to the opportunity created by Bangladesh's tariff setback.The new 35% tariff, which takes effect from August 1, represents a slight reduction from the earlier proposed 37% announced in April. Despite this, it remains significantly above the standard 10% base rate and is expected to dent Bangladesh's position in the global apparel trade.India, on the other hand, continues to face a 10% average tariff on textile exports to the US, although some product segments attract duties as high as 26% due to differences in classification and product type. This ongoing shift in global tariff structures is likely to change the competitive equation, especially if India's trade negotiations with the US lead to a reduction in duties.Industry players are expected to monitor closely any movement on a potential bilateral trade agreement between India and the US. Last week, an Indian delegation returned from Washington after holding discussions. A favourable outcome in the form of reduced tariffs on Indian textile exports could help improve pricing power and market share in the US, which remains a critical market for the sector.(With ToI inputs)