Indian textile industry must dig deep to survive US tariff shock

Trump’s astounding tariffs not only threaten the successful 25-year-old trade partnership between the two countries but are also becoming a defining moment for India’s textiles, posing an existential threat to many manufacturers in an industry that was once the most promising in terms of growth.

One of the country’s oldest industries, providing direct employment to at least 45 million people, India’s textiles sector is closely linked to its agriculture. Much of the sector is known for its fine cotton exports, with India being one of the world’s largest cotton producers. The textile market was set to achieve a revenue of US$350 billion by 2030, doubling its contribution to gross domestic product from 2.3 per cent to about 5 per cent.

The untimely tariffs, however, have inflicted considerable pain on this growth story. According to the Global Trade Research Initiative, India’s textile exports to the US could plunge by as much as 70 per cent.

The US is India’s largest export market, accounting for nearly 29 per cent of its textile and apparel exports, with sales of US$11 billion in the 2024-2025 financial year. Though this represents only 6 per cent of India’s US$179 billion textile industry, the country’s manufacturers of garments, bedsheets, apparel and more will have to scramble to find alternative markets.

Industry insiders say the tariff shock is seismic. In the southern Indian state of Tamil Nadu, one of the country’s major textile manufacturing hubs, the tariffs threaten three million jobs, with 20,000 factories at risk. The country’s textile industry has appealed for urgent cash support from the government, a moratorium on loan repayments and a fast-tracking of free trade agreement negotiations with the European Union to cushion the blow.