The Indian textile and apparel sector, among the worst-hit by tariffs imposed by US President Donald Trump last year, is pinning its hopes on the upcoming Union Budget even as exporters accelerate efforts to diversify markets and products.
The tariffs, announced in April and implemented from August 27, attracted levies of over 60% on certain categories, severely denting India’s competitiveness in its largest export market. As a result the sector has seen loss of market share in the US exports
KM Subramanian, President of the Tiruppur Exporters’ Association (TEA), said the industry’s key demands include the introduction of a focus market scheme for the US, increasing interest subvention to 5% without value limits to support MSME exporters, and greater support for modernisation and technology upgradation.
In a letter to Union Finance Minister Nirmala Sitharaman, the Southern Gujarat Chamber of Commerce & Industry (SGCCI), has sought a reduction in GST on chemicals used for man-made fibre such as MEG, PTA and polyester staple fibre from 18% to 5%.
Nikhil Madrasi, President of SGCCI, also asks for increased benefit under Duty Drawback Scheme, Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP) and additional benefit of tariff refund linked to direct exports to US on a par with the actual tariff paid.
Sagar Shah, partner, tax and regulatory at EY India, said GST on key Man-made fibre (MMF) raw materials under Chapters 29 and 39 should be reduced to correct duty inversion. “This would ease input tax credit accumulation, lower capital costs and improve India’s export competitiveness,” he said.
Industry bodies such as the Clothing Manufacturers’ Association of India (CMAI) have also urged the government to levy a uniform 5% GST on ethnic wear priced below `10,000 to support domestic brands.
The US remains the largest market for Indian textiles and apparel, accounting for exports of nearly $10–12 billion annually. Of this, about $5 billion worth of products—mainly cotton garments—are shipped from Tiruppur in Tamil Nadu. Man-made fibre (MMF) garments account for only about 10% of exports.
Haresh Calcuttawala, Founder and CEO of Trezix, said the impact of US tariffs in 2025 was relatively muted. “The impact was around 6–8%, even though US exports fell by 16-18%. This was because US buyers had placed orders well in advance. We had a strong order pipeline before the tariffs kicked in,” he said.