India’s textile exporters pin hopes on EU deal after US tariff blow

[NEW DELHI] India’s textile and apparel exporters, who were hit by the 50 per cent US tariffs imposed late in August 2025, are banking on Tuesday’s (Jan 27) trade agreement with the European Union to offset part of the damage.

At the same time, the exporters are urging New Delhi to secure a quick deal with Washington.

Under the pact, which will be implemented in about a year, the EU will immediately remove duties on 90 per cent of Indian goods, including the roughly 12 per cent tariff on textiles and apparel.

Ashwin Chandran, chairman of the Confederation of Indian Textile Industry (CITI), said: “At a time when the sector is weighed down by high US tariffs, the India-EU agreement opens the door to greater market access.” He added that jobs in the sector are currently at risk.

US shipments fell more than 50 per cent in October-to-December quarter from July to September, for nearly one-quarter of textile exporters, a CITI survey showed. Businesses warned that losses could reach US$5 billion to US$6 billion in 2026 without a US deal.

In a letter to the government, the Apparel Export Promotion Council (AEPC) said that the higher US tariffs have hurt companies that earn up to 70 per cent of their sales from the US, risking order cancellations and factory shutdowns, and it urged for swift action to avoid lasting damage.

India’s textile and apparel exports held steady at US$37.5 billion in 2025 despite the drop in US orders, as exporters diverted shipments to markets such as the EU, the United Arab Emirates, Japan and Africa, government estimates showed.

Nevertheless, the US remains India’s top market, taking 28 per cent of its textile and apparel exports – about US$11 billion out of US$38 billion in the financial year ended March 2025. The EU was the second-largest market, receiving around one fifth of total shipments.

AEPC chairman A Shakthivel said: “Zero-duty access to the EU market will enhance Indian garments’ competitiveness.” He projected that the EU exports could grow 20 to 25 per cent annually, and double in three to four years.

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Currently, India’s share of the EU’s US$250 billion apparel market is just 3 per cent, with shipments dominated by China, Bangladesh and Vietnam due to lower duties.

Near-term risks

However, analysts warned of near-term risks for Indian exporters, as the EU has suspended preferential tariffs on Indian apparel from 2026 to 2028, and it will be at least one year before the new deal comes into force.

The gap before full implementation could temporarily raise costs and squeeze margins, they added.

The analysts noted that exporters will still need to meet strict EU technical and safety norms, including detailed labelling, chemical limits and health-and-environment certifications.

Of the EU’s top 20 high-demand ready-made garment products, India exports only eight cotton and two man-made fibre items, showing a gap in matching demand.

Kumar Duraiswamy, joint secretary of the Tiruppur Exporters Association, said that some major EU fashion brands, including H&M and Zara, have visited factories in Tiruppur, the southern textile hub, to plan new orders. He expects the exporters to add capacity, win new customers and expand into synthetic garments.

“Opening up the European market will be hugely beneficial for India’s textile industry, particularly at a time when exporters are facing serious challenges in the US market,” said Rajinder Gupta, chief executive officer of Trident Group, who expects the group’s exports to double in two to three years.

“However, the amount of US business cannot be replaced by any other market,” he added. REUTERS