Though India has obtained a relatively lower tariff rate under the new US trade regime, Indian textile exporters are concerned that other competing nations have been granted extra treaty benefits that could impact their market share in the US.

Although the 10% US duty for India is below those used for several important exporting nations, the lack of TRQ exemptions for India's textiles and apparel producers may undermine the benefit and pose some difficulties for the country’s exporting capacity.

As cited in an Emkay Research report, the possibility of India's retail and apparel industry being under pressure can’t be ruled out as the sector is attracted with a comparatively favourable tariff rate vis-à-vis a few of its main competitors.

India Gets Lower US Tariff Compared With Key Competitors

Within the new US tariff classification, India is subject to a 10% Section 301 tariff rate, ahead of many competing countries.

Countries like China, Vietnam, Brazil and Thailand are facing higher tariff rates, thereby improving India's standing at first glance.

However, some commentators argue that headline tariff rates are not sufficient to describe market access in full.

Some rival countries such as Bangladesh, Cambodia, Indonesia and Malaysia have been awarded tariff-rate quotas (TRQs). This enables them to enjoy more privileged access to the US market under particular conditions.

These exceptions constitute certain levels of textile and apparel import allowances utilizing US-origin cotton and fibre, providing an extra benefit for textile exporters from these countries.

Why Indian Textile Exporters Are Still Concerned

The biggest issues facing Indian garment producers are not just the tariff rate alone, nor is it the differential treatment with rival countries.

While the United States imposes a lower overall tariff than several other countries, Indian exporters may be a little less competitive in the highly competitive US market because of the absence of the TRQ advantage.

According to Emkay Research, Indian textile and apparel exports have not so far been provided the benefit of the TRQ exemption offered to countries like Bangladesh, Cambodia, Indonesia, and Malaysia.

This may lead to higher effective costs for Indian exporters compared to others who are subject to preferential tariff arrangements.

The textile sector is very sensitive to tariff modifications, as quality-conscious buyers across the world tend to compare several countries in their choice of supplier based on parameters like:

• Price
• Cost of production
• Market access conditions
• Trade benefits

India Remains Among Relative Beneficiaries of US Tariff Framework

Despite the textile industry's concerns, India is among the better-placed exporters under the new US tariff scheme.

According to the Emkay Research report, India's effective tariff rate in the US market is estimated at around 12%.

This remains lower compared with:

• Bangladesh: Around 25%
• China: Around 22%
• Vietnam: Around 14%
• Indonesia: Around 14%

This indicates that India remains ahead of many competing manufacturing locations.

However, the benefit will differ for certain sectors such as textiles and apparel, which face a different challenge due to tariff exemptions available to competitor countries.

Impact of US Tariff on India Exports

The latest US tariff on India is anticipated to impact a considerable share of exports from India to the US.

As per the report, about 55% of India's exports to the US will be subjected to the additional 10% Section 301 tariff.

The remaining 45% of exports are either not within the scope of the additional duty or are already covered under separate tariff schemes.

Certain products, such as generic pharmaceuticals and smartphones, are outside this additional impact of Section 301.

At the same time, some other sectors, including:

• Steel
• Aluminium
• Auto parts

are covered by separate Section 232 tariffs.

India’s Exports to US Show Recovery After Earlier Tariff Relief

Following the removal of earlier IEEPA tariffs, the report noted improvement in India’s export performance.

Reflecting the fact that previous tariff measures were found unlawful, India's exports to the US have shown improvement, according to Emkay Research.

India’s monthly exports to the US averaged around $8.4 billion over four months, compared with approximately $6.5 billion during the previous six months.

The recovery suggests that demand for Indian products continues in the US market despite ongoing trade uncertainties.

India-US Trade Deal Negotiations Gain Importance

The ongoing India-US trade deal negotiations will be crucial in shaping the future of India’s export competitiveness.

Trade negotiations offer the possibility that Indian exporters may gain improved market access through concessional tariff levels and broader trade conditions for industries such as:

• Textiles
• Pharmaceuticals
• Electronics
• Manufacturing

The Emkay report also highlighted that successful negotiations will be critical for securing reduced tariff rates and preferential access for Indian exports to the US.

Indian industries, especially export-oriented sectors, consider stable trade relations with the US as an important goal.

Future Risks for Indian Exporters

Though the current system gives India a comparatively better standing than several other countries, exporters might still face uncertainty.

The US has opened new Section 301 investigations related to excess manufacturing capacity. Further tariffs may be implemented if these investigations result in additional trade measures.

This could create challenges for Indian manufacturers and exporters.

The textile industry, which is already facing intense international competition, will continue monitoring future US trade policy decisions.

What This Means for India’s Textile Industry

The Indian textile and apparel industry has been working to increase its exports globally.

A lower tariff rate provides some assistance; however, maintaining competitiveness will require addressing several key areas:

• Production costs
• Supply chain efficiency
• Preferential trade access
• Global competition
• Compliance with international standards

Export powerhouses like Bangladesh, Vietnam and Indonesia have strengthened their positions as textile exporters, making tariff benefits increasingly important for global buyers.

For India, achieving improved trade arrangements through the India-US trade agreement could become important for future textile export growth.

Conclusion: Lower Tariff Offers Opportunity, But Textile Exporters Remain Cautious

India benefits from a 10% US tariff rate, which is lower than many competing exporters. However, the absence of tariff-rate quota (TRQ) exemptions has raised concerns about how Indian textile and apparel companies will maintain competitiveness in the US market.

Although India continues to enjoy a relatively favourable tariff position, exporters will seek greater clarity on future US trade policy commitments and ongoing negotiations.

India’s focus will remain on obtaining equitable market access for textile and apparel industries, improving competitiveness, and supporting export growth amid changing global trade conditions.