New Delhi, [India], September 2 (ANI): Indian textile losses due to the US tariffs are expected to be partly offset by export growth to the United Kingdom, supported by the India-UK free trade agreement (FTA), according to a report by Care Edge Ratings.
The exports are under pressure following the US government’s decision to impose a 50 per cent tariff on Indian goods, effective from August 27, hurting the competitiveness of Indian exporters in the American market.
It stated “The expected decline in exports is likely to be compensated by increase in exports to UK aided by India-UK FTA, and ongoing FTA negotiations with the EU”.
With the higher tariffs in place, some export orders are expected to shift towards competing countries such as Vietnam, Bangladesh, Pakistan, and China.
However, the report noted that textile exports from India may not see a sharp fall in CY25, as several US buyers have already advanced their shipments ahead of the tariff hike deadline.
The more significant decline in shipments to the US is expected to be seen in CY26, when the full impact of the tariffs will be felt.
The report highlighted that India’s textile and apparel exports, valued at USD 35 billion in CY24, are significantly dependent on the US market, which contributes about 28-29 per cent of the overall shipments.
The India-UK FTA is expected to provide a major boost to India’s ready-made garments (RMG) and home textiles sectors by creating a level-playing field against other competing nations in the UK’s textile and apparel import market, which is estimated at nearly USD 23 billion.
In addition, ongoing FTA negotiations with the European Union are also expected to aid Indian textile exports in the coming years.
The report highlighted that India’s textile and apparel industry stands at around USD 160-170 billion in size, with the domestic market accounting for 78-80 per cent of this share.
Of the USD 35 billion in exports recorded in CY24, RMG and home textiles accounted for the majority share of about 63 per cent. The United States continues to remain the largest export destination for India, with textile and apparel shipments worth nearly USD 10.5 billion in CY24.
The report concluded that while India faces near-term risks from the US tariff hike, strategic trade agreements with the UK and the EU could help balance the impact and support long-term growth of the textile sector. (ANI)
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